A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a deal last year.
Kim Beom-su, the founder of technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him due to concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment last year as part of a scheme to thwart Hybe, another prominent K-pop agency, from acquiring it.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively. Kakao ultimately acquired SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted for stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao is a significant player in the tech industry, with Kim holding approximately a 24% stake in the company. In 2020, Kakao employed more than 10,000 people. At one time, Kim was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing that it will be crucial for those remaining at the company to demonstrate its capability to function effectively in Kim’s absence.