A South Korean billionaire and technology 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 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.
In a staff meeting last week, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of conducting stock manipulation involving SM Entertainment as part of efforts to thwart another major K-pop agency, Hybe, from acquiring it.
Both SM Entertainment and Hybe are major players in South Korea’s K-pop industry, representing popular groups Aespa and BTS, respectively. Eventually, Kakao successfully acquired SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges related to stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao is a significant technology firm in South Korea. Kim holds approximately a 24% stake in the company, which had over 10,000 employees in 2020. He was once considered South Korea’s wealthiest individual, with a net worth estimated at over $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation might represent Kakao’s “biggest crisis.” He emphasized that the responsibility lies with the remaining leadership to demonstrate that the company can continue to function effectively even in the absence of its founder.