A prominent South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly engaging in stock price manipulation involving a major K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech giant Kakao, has not yet faced formal charges, according to reports. An arrest warrant was issued by the Seoul Southern District Court, with prosecutors expressing concerns that he might flee the country or destroy evidence related to the case.
Kim has denied the allegations, stating during a staff meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment in an effort to thwart a bid by another major K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are among the largest K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded by Kim in 2010 and headquartered in Jeju City, Kakao employed over 10,000 people as of 2020. Kim, who holds a 24% stake in the company, was once recognized as South Korea’s richest individual, boasting an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price dropped by 5%. Woochan Kim, a professor at Korea University Business School, suggested that this incident could represent a significant crisis for Kakao. He emphasized the importance of the remaining leadership showing the company’s ability to operate effectively without its founder.