Kim Beom-su, the billionaire founder of the South Korean tech company Kakao, was arrested on Tuesday for allegedly manipulating the stock price of SM Entertainment, a major K-pop agency, during a takeover attempt last year.
Although he has not yet been formally charged, an arrest warrant was issued by the Seoul Southern District Court. Prosecutors expressed concerns that he might flee the country or destroy evidence related to the case.
Kim has denied the allegations, stating in a recent staff meeting that he has never engaged in or authorized any illegal activities. Kakao expressed disappointment over the arrest, labeling it “unfortunate.”
The 58-year-old entrepreneur is accused of using manipulative practices to influence SM Entertainment’s stock in order to thwart rival agency Hybe’s acquisition efforts. Currently, SM Entertainment and Hybe are two of the leading companies in the K-pop industry, representing prominent groups such as Aespa and BTS.
Kakao ultimately succeeded in acquiring SM Entertainment, while the company’s chief investment officer, Bae Jae-hyun, was also indicted last year on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao, in which Kim holds a 24% stake, employed over 10,000 people as of 2020. At one time, Kim was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price fell by 5%. Woochan Kim, a professor at Korea University Business School, commented that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to ensure the company continues to thrive in Kim’s absence.