A South Korean billionaire and tech leader was arrested on Tuesday for allegedly engaging in stock price manipulation involving a prominent K-pop agency last year.
Kim Beom-su, the founder of technology giant Kakao, has not yet been formally charged. The Seoul Southern District Court has issued an arrest warrant for him amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim, 58, has publicly denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a meeting at Kakao last week. The company described his arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment during a takeover bid last year to thwart Hybe, another leading K-pop agency, from acquiring it. Both SM Entertainment and Hybe represent some of the biggest names in the K-pop industry, with artists such as Aespa and BTS under their banners.
Kakao eventually completed its acquisition of SM Entertainment. In the previous year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kim’s Kakao holds about a 24% stake in the company and employed over 10,000 people as of 2020. At one time, Kim was the richest person in South Korea, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock decreased by 5%. Woochan Kim, a business professor at Korea University, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining team at the company to demonstrate effective leadership in Kim’s absence.