A South Korean billionaire and tech entrepreneur was arrested 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 technology firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or tamper with evidence.
Kim has denied the allegations, asserting during a staff meeting at Kakao last week that he has never instructed or condoned any illegal actions. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to prevent rival K-pop agency Hybe from acquiring the company.
Both SM Entertainment and Hybe are among South Korea’s largest K-pop firms, representing top acts like Aespa and BTS. Kakao ultimately succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim established Kakao in 2010, and he holds approximately a 24% stake in the company, which employed over 10,000 individuals in 2020. At one point, he was the richest person in South Korea, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, stated that this could represent Kakao’s “biggest crisis.” He emphasized that it is now up to the remaining leadership to demonstrate that the company can operate successfully without its founder.