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 the tech company Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concern that he might flee the country or destroy evidence.
During a staff meeting last week, Kim denied the allegations, asserting that he had never authorized or supported any illegal activities. Kakao described the situation as “unfortunate.”
The 58-year-old is accused of orchestrating stock manipulation involving SM Entertainment during a takeover bid last year, with the intent of hindering rival K-pop agency Hybe from acquiring the company. SM Entertainment and Hybe are among the largest K-Pop firms in South Korea, representing groups such as Aespa and BTS.
Eventually, Kakao succeeded in acquiring SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, and he held approximately a 24% ownership stake in the company, which employed over 10,000 individuals as of 2020. He was once recognized as South Korea’s richest person, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price fell by 5%. A business professor at Korea University suggested that this situation could represent Kakao’s most significant crisis, emphasizing the importance for the remaining leadership to demonstrate the company’s viability without its founder.