A South Korean billionaire and tech entrepreneur, Kim Beom-su, was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim, the founder of the technology giant Kakao, has not faced formal charges yet. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he may flee the country or destroy evidence.
Kim denied the allegations during a staff meeting at Kakao last week, 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 is accused of manipulating the stock of SM Entertainment amid a takeover attempt that aimed to thwart rival agency Hybe from acquiring it. SM Entertainment and Hybe are major players in the K-pop industry, representing popular groups like Aespa and BTS, respectively.
Eventually, Kakao completed its acquisition of SM Entertainment. Additionally, Bae Jae-hyun, Kakao’s chief investment officer, has faced indictments over stock manipulation charges linked to the same context.
Founded in 2010 and based in Jeju City, Kakao has over 10,000 employees, and Kim holds around a 24% stake in the company. At one point, he was South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could be Kakao’s “biggest crisis,” emphasizing the need for the remaining leaders at the company to demonstrate its capacity to operate effectively in Kim’s absence.