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 Kakao, has not yet been formally charged. However, a judge from the Seoul Southern District Court issued an arrest warrant for him, citing concerns that he might flee the country or destroy evidence.
In a recent staff meeting, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao deemed his arrest as “unfortunate.”
The charges against the 58-year-old businessman involve accusations of stock manipulation related to SM Entertainment during a takeover attempt last year, aimed at thwarting another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop companies, representing notable acts like Aespa and BTS, respectively. Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people, with Kim holding approximately a 24% stake in the company. Once the richest person in South Korea, his net worth was estimated at over $13 billion.
In response to the news of his arrest, Kakao’s stock fell by 5%. A professor from Korea University Business School remarked that this could be Kakao’s “biggest crisis,” emphasizing the importance for the company’s remaining leaders to demonstrate effective management in Kim’s absence.