A South Korean billionaire and technology entrepreneur was apprehended on Tuesday over allegations of stock price manipulation involving a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
In response to the allegations, Kim stated at a company meeting that they are unfounded, asserting, “I have never instructed or condoned any illegal acts.” Kakao characterized the arrest as “unfortunate.”
The 58-year-old is suspected of manipulating the stock of SM Entertainment during a takeover attempt last year to thwart Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe are two of South Korea’s top K-pop firms, representing popular groups like Aespa and BTS.
Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Kim founded Kakao in Jeju City in 2010 and held approximately a 24% stake in the company, which employed over 10,000 individuals by 2020. At one time, he was the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock experienced a 5% drop on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.” He emphasized the importance of demonstrating that the company can operate effectively without its founder.