A South Korean billionaire and tech executive was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal that took place last year.
Kim Beom-su, the founder of the technology firm Kakao, has not been formally charged yet. The Seoul Southern District Court issued an arrest warrant to ensure he remains in custody, as prosecutors are concerned he might flee the country or tamper with evidence.
In a recent staff meeting at Kakao, Kim, 58, stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
Kim is accused of manipulating shares of SM Entertainment during a takeover bid last year to thwart Hybe, another major K-pop agency, from acquiring it. SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing artists such as Aespa and BTS.
Kakao ultimately completed the acquisition of SM Entertainment. Additionally, Kakao’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges last year.
Founded in 2010 and based in Jeju City, Kakao employed over 10,000 people in 2020, with Kim holding approximately a 24% stake in the company. At one time, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the announcement of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing the responsibility of remaining employees to demonstrate the company can operate successfully without its founder.