A prominent South Korean billionaire and technology leader has been arrested on allegations of manipulating the stock price of a major K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech firm Kakao, has yet to be formally charged, according to reports. The arrest warrant was issued by the Seoul Southern District Court amid concerns that he might flee the country or destroy evidence.
In a recent meeting with Kakao staff, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur is suspected of orchestrating stock manipulation related to SM Entertainment during a takeover attempt, aimed at thwarting Hybe, another major K-pop label, from acquiring the company.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop entities, representing popular groups Aespa and BTS, respectively. Ultimately, Kakao did acquire SM Entertainment, and last year, the company’s chief investment officer was also indicted on similar charges.
Kim established Kakao, based in Jeju City, in 2010, and as of 2020, the company had over 10,000 employees. At one time, he was recognized as South Korea’s richest person, with an estimated fortune exceeding $13 billion. Following the news of his arrest, Kakao’s stock dropped by 5%.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.” He emphasized that it would now be essential for the remaining leadership to demonstrate the company’s ability to operate effectively in Kim’s absence.