A billionaire and tech executive from South Korea has been arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. A Seoul Southern District Court issued an arrest warrant for him as prosecutors expressed concerns about the possibility of him fleeing the country or destroying evidence.
Kim denied the allegations, stating in a recent meeting at Kakao that he has never encouraged or condoned any illegal activities. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt, which was allegedly aimed at thwarting rival K-pop agency Hybe from acquiring it.
Both SM Entertainment and Hybe are among South Korea’s largest K-pop companies, with SM representing groups like Aespa and Hybe representing the globally recognized BTS.
Kakao eventually succeeded in acquiring SM Entertainment. In a related incident last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao employs over 10,000 staff, and Kim reportedly holds about a 24% stake in the company. His net worth once exceeded $13 billion, making him one of South Korea’s wealthiest individuals.
Following news of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” highlighting the challenge for the remaining leadership to maintain effective company operations in the absence of its founder.