A South Korean billionaire and tech entrepreneur was apprehended on Tuesday for allegedly manipulating the stock prices of a prominent K-pop agency during a transaction that took place last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet faced formal charges, according to reports. An arrest warrant was issued by the Seoul Southern District Court to ensure his custody, with prosecutors expressing concerns that he might attempt to flee the country or destroy evidence.
Kim denied the charges, stating in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old mogul is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly as part of a strategy to block Hybe, another major K-pop agency, from acquiring it.
Both SM Entertainment and Hybe are among South Korea’s largest K-pop companies, with Aespa and BTS under their banners, respectively. Ultimately, Kakao succeeded in acquiring SM Entertainment. Previously, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on charges of stock manipulation linked to the same case.
Founded in 2010 and based in Jeju City, Kakao is a major player in the tech industry. Kim retains approximately a 24% stake in the company, which employed over 10,000 staff as of 2020. At one time, he was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the announcement of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, suggested that this situation could represent Kakao’s “biggest crisis.”
“It would be the job of those who remain at the company to show that it can run well even with the founder not around,” he commented.