A prominent South Korean billionaire and tech entrepreneur was arrested Tuesday over allegations of stock price manipulation involving a major K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet faced formal charges. The Seoul Southern District Court approved an arrest warrant, with prosecutors citing concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated in a recent staff meeting at Kakao, as reported. The company expressed that the arrest is “unfortunate.”
Kim, 58, is accused of manipulating the stock of SM Entertainment during a takeover last year, aiming to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-pop firms, representing major acts like Aespa and BTS. Kakao eventually purchased SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun also faced indictment on similar stock manipulation charges.
Kim founded Kakao in 2010, and he held approximately a 24% ownership stake in the company, which had over 10,000 employees as of 2020. He was once considered South Korea’s richest individual, with an estimated fortune exceeding $13 billion.
In response to the news of his arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.” He added, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”