A prominent South Korean billionaire and tech entrepreneur was apprehended on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court authorized the arrest amid concerns that he might flee the country or destroy evidence.
Kim stated in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described his arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover bid last year, allegedly to thwart another major K-pop agency, Hybe, from acquiring it.
Both SM Entertainment and Hybe are among South Korea’s largest K-pop enterprises, with artists such as Aespa under SM and BTS under Hybe.
Kakao eventually secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, with its headquarters located in Jeju City. Holding approximately a 24% stake in the company, he oversaw a workforce of over 10,000 employees in 2020. At one time, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock plunged by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.” He emphasized that it would now be crucial for the remaining executives to demonstrate the company’s ability to operate effectively without its founder.