A prominent South Korean billionaire and tech leader was arrested on Tuesday under allegations of manipulating the stock prices of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant over concerns that he might flee the country or destroy evidence.
“I have never directed or allowed any illegal activities,” Kim stated during a staff meeting at Kakao last week, calling the arrest “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment amid a takeover attempt, aimed at hindering rival K-pop agency Hybe from acquiring the company.
SM Entertainment and Hybe are two of South Korea’s largest K-pop firms, representing popular groups Aespa and BTS, respectively. Kakao eventually completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar charges related to stock manipulation.
Kim, who founded Kakao in 2010 and holds approximately a 24% stake in the company, grew the firm to employ over 10,000 individuals by 2020. At one point, he was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock fell by 5%. Business expert Woochan Kim from Korea University noted that this could mark Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate effective management in Kim’s absence.