A prominent South Korean billionaire and technology executive was apprehended on Tuesday due to allegations of stock 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. The Seoul Southern District Court approved an arrest warrant amid concerns from prosecutors that he might flee the country or destroy evidence related to the case.
Kim has publicly denied the allegations, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent staff meeting at Kakao. The company has described the situation as “unfortunate.”
The 58-year-old is accused of manipulating shares of SM Entertainment in connection with a takeover last year, allegedly to hinder Hybe, another leading K-pop agency, from acquiring the company.
Both SM Entertainment and Hybe are significant players in the South Korean K-Pop industry, with SM representing the group Aespa and Hybe associated with the globally popular BTS.
Kakao successfully completed its acquisition of SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted for similar stock manipulation allegations.
Founded in 2010 and headquartered in Jeju City, Kakao has become a major player in the tech industry, with Kim holding approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was the richest person in South Korea, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock price dropped by 5%. Woochan Kim, a professor at Korea University Business School, commented that this incident could represent Kakao’s “biggest crisis,” emphasizing the responsibility of remaining company leaders to demonstrate that the business can thrive without its founder.