A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock prices of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court authorized an arrest warrant due to concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment in a bid to thwart Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular groups such as Aespa and BTS, respectively.
Kakao succeeded in acquiring SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is partially owned by Kim, who held about a 24% stake as of 2020, when the company employed over 10,000 staff members. At one time, he was considered South Korea’s wealthiest individual, with an estimated 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, remarked that this could represent Kakao’s “biggest crisis.” He emphasized the necessity for the remaining leadership to demonstrate effective management without Kim’s presence.