A South Korean billionaire and technology executive was arrested on Tuesday for allegedly engaging in stock price manipulation of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure his custody, as prosecutors expressed concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment in connection with a takeover last year, allegedly to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are among the largest K-pop firms in South Korea, representing popular acts such as Aespa and BTS.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a significant player in the tech industry. Kim holds approximately a 24% stake in the company, which had over 10,000 employees as of 2020. He was once deemed South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock price fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, noted that this situation could represent “Kakao’s biggest crisis.” He emphasized the need for the remaining leadership at the company to demonstrate effective management in the founder’s absence.