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 transaction last year.
Kim Beom-su, the founder of technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
Kim has publicly denied the allegations, asserting during a meeting with Kakao staff last week that he has never endorsed any illegal activities. Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of engaging in stock manipulation related to SM Entertainment last year, ostensibly to thwart Hybe, another leading K-pop agency, from acquiring it.
Both SM Entertainment and Hybe are significant players in the South Korean K-Pop industry, representing major artists such as Aespa and BTS. Ultimately, Kakao succeeded in acquiring 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 is a substantial employer, with more than 10,000 staff reported in 2020, and Kim has a stake of approximately 24% in the company. At one point, he was the wealthiest individual in South Korea, boasting an estimated net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock price fell by 5%.
Woochan Kim, a business professor at Korea University, commented that this could pose a significant challenge for Kakao. He noted that it would be crucial for the remaining leadership to demonstrate that the company can operate effectively without its founder.