A 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 deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, asserting the accusations are false. The company expressed that the arrest was “unfortunate.”
Kim, aged 58, is accused of tampering with the stock of SM Entertainment amid a takeover bid last year, allegedly to thwart another prominent K-pop agency, Hybe, from acquiring the company.
SM Entertainment and Hybe are two leading K-Pop entities in South Korea, known for representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao succeeded in acquiring SM Entertainment. Additionally, Kakao’s chief investment officer, Bae Jae-hyun, was indicted last year on similar stock manipulation allegations.
Founded in 2010 and based in Jeju City, Kakao has grown under Kim’s leadership, with the founder holding approximately a 24% stake in the company. As of 2020, Kakao employed over 10,000 individuals and had previously made Kim South Korea’s wealthiest person with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, described this situation as potentially Kakao’s “biggest crisis,” noting it will be essential for those remaining in the company to demonstrate effective management in Kim’s absence.