A prominent South Korean billionaire and tech entrepreneur was arrested on Tuesday in connection with alleged stock price manipulation involving a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant in light of concerns from prosecutors that he might flee the country or destroy evidence.
Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent staff meeting at Kakao. The company described his arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment to thwart a takeover by another major K-pop firm, Hybe. SM Entertainment and Hybe are two of South Korea’s leading K-pop entities, representing popular groups Aespa and BTS respectively.
Kakao ended up acquiring SM Entertainment, but last year, Kakao’s chief investment officer Bae Jae-hyun faced similar stock manipulation allegations.
Kim founded Kakao in 2010, and he retains approximately a 24% ownership stake in the company, which employed over 10,000 workers in 2020. At one point, he was considered South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the arrest news, Kakao’s stock price dropped by 5% on Tuesday.
Woochan Kim, a professor at the Korea University Business School, commented that this could represent Kakao’s “biggest crisis,” emphasizing the need for those remaining in the company to demonstrate its ability to thrive in Kim’s absence.