A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a merger last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant amid concerns from prosecutors that he may attempt to flee the country or destroy evidence.
Kim denied the allegations during a staff meeting at Kakao last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao expressed regret over the situation, calling the arrest “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment as part of a strategy to thwart a takeover by Hybe, another major K-pop agency.
SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing popular acts like Aespa and BTS.
Ultimately, Kakao acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao is a significant player in the tech industry, with Kim holding approximately 24% of its shares. The company employed over 10,000 people in 2020, and Kim was once recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, stated that this could be Kakao’s “biggest crisis” and emphasized the importance of the company’s leadership in proving its ability to operate effectively without its founder.