A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure his custody, citing concerns that he might flee the country or destroy evidence.
Kim stated in a recent staff meeting at Kakao that the allegations are false and asserted, “I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover last year to block rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two of the largest K-Pop firms in South Korea, associated with popular groups Aespa and BTS, respectively.
Ultimately, Kakao completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao employed over 10,000 people in 2020, with Kim holding approximately a 24% stake in the company. At one point, he was recognized as South Korea’s wealthiest individual, boasting an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price declined by 5%.
Woochan Kim, a professor at Korea University Business School, commented that this could represent Kakao’s “biggest crisis,” emphasizing the responsibility of remaining executives to demonstrate the company’s capability to thrive in Kim’s absence.