A South Korean billionaire and technology entrepreneur was arrested on Tuesday under allegations of stock price manipulation involving a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has yet to face formal charges as the Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence. Kim denied the allegations, stating at a company meeting that he has never authorized or supported any illegal activities. Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment in connection with a takeover attempt last year, allegedly to thwart rival K-pop agency Hybe from acquiring the company. SM Entertainment and Hybe are two of South Korea’s largest K-pop firms, representing popular acts like Aespa and BTS.
Eventually, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer was also indicted on charges related to stock manipulation.
Kim established the technology firm in 2010 in Jeju City and retained approximately a 24% stake in the company, which employed over 10,000 people as of 2020. He was previously regarded as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock experienced a 5% drop on Tuesday. A business professor noted that this situation could represent Kakao’s “biggest crisis,” emphasizing that it is now up to the remaining leadership to demonstrate the company’s ability to operate successfully without its founder.