A prominent South Korean billionaire and tech entrepreneur was arrested on Tuesday on allegations of manipulating the stock price of a major K-pop agency during a takeover bid last year.
Kim Beom-su, the founder of the technology company Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant for him amid concerns from prosecutors that he may attempt to flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated in a company meeting at Kakao last week, denying the allegations. Kakao described the arrest as “unfortunate.”
At 58 years old, Kim faces accusations of stock manipulation related to SM Entertainment during a takeover effort intended to thwart Hybe, another leading K-pop agency, from acquiring the company.
Both SM Entertainment and Hybe are major players in South Korea’s K-pop industry, representing popular acts such as Aespa and BTS.
Kakao successfully acquired SM Entertainment, but 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 significant player in the tech industry, with Kim holding approximately a 24% stake. At one point, he was recognized as South Korea’s richest individual, boasting a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this incident could represent Kakao’s “biggest crisis.” He emphasized that it would be crucial for the remaining executives to demonstrate that the company can continue to thrive in Kim’s absence.