A South Korean billionaire and technology executive 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. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
In a recent meeting at Kakao, Kim maintained his innocence, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment during a takeover bid aimed at thwarting another K-pop powerhouse, Hybe, from acquiring the agency. SM Entertainment and Hybe are significant players in the K-pop industry, managing major groups Aespa and BTS, respectively.
Kakao ultimately took control of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also charged with stock manipulation.
Founded by Kim in 2010 and based in Jeju City, Kakao employed over 10,000 people as of 2020. At his peak, Kim was South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, noted that this situation might represent Kakao’s “biggest crisis,” emphasizing that it would be crucial for remaining executives to demonstrate the company can function effectively without its founder.