A billionaire South Korean technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of 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.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated in a recent meeting with Kakao staff. The company expressed that the arrest is “unfortunate.”
Kim, aged 58, is alleged to have manipulated the stock of SM Entertainment during a takeover bid last year in order to thwart rival firm Hybe from acquiring it. SM Entertainment and Hybe are two of South Korea’s leading K-pop entities, representing artists like Aespa and BTS.
Ultimately, Kakao succeeded in acquiring SM Entertainment. Additionally, last year, Kakao’s chief investment officer Bae Jae-hyun faced indictment on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao employed over 10,000 people as of 2020. Kim once held the title of South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, noted that this incident could represent Kakao’s “biggest crisis.” He emphasized that it would be crucial for the remaining leadership to demonstrate that the company can thrive in Kim’s absence.