A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a takeover 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 to ensure his custody, as prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim, 58, denied the allegations during a recent staff meeting at Kakao, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment to thwart rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe are two of South Korea’s largest K-pop firms, representing popular groups Aespa and BTS, respectively.
Kakao eventually bought SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on similar stock manipulation charges.
Kim established Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one time, he was South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped 5%. Woochan Kim, a professor at Korea University Business School, remarked that this might represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s stability in Kim’s absence.