A South Korean billionaire and technology entrepreneur, Kim Beom-su, was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year. Kim, the founder of the tech giant Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant amid concerns that he might flee the country or destroy evidence.
In a recent staff meeting, Kim denied the allegations, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao expressed that the arrest was “unfortunate.”
The 58-year-old billionaire is accused of manipulating the stock of SM Entertainment during a takeover last year, part of an effort to thwart another K-pop powerhouse, Hybe, from acquiring the company. Both SM Entertainment and Hybe represent major K-pop acts, including Aespa and BTS, respectively.
Kakao eventually secured the acquisition of SM Entertainment. In connection with the same case, Bae Jae-hyun, Kakao’s chief investment officer, faced indictment for stock manipulation last year.
Kim established Kakao in 2010 in Jeju City and held approximately a 24% stake in the company, which employed over 10,000 people by 2020. He was once considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock experienced a 5% decline on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this may represent Kakao’s “biggest crisis,” emphasizing that it will be vital for those remaining at the company to demonstrate that operations can continue effectively in the founder’s absence.