A billionaire South Korean tech entrepreneur was arrested on Tuesday for reportedly manipulating the stock price 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. A Seoul Southern District Court authorized the arrest warrant, citing concerns that Kim might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to obstruct Hybe, another major K-pop agency, from acquiring it. SM Entertainment and Hybe are key players in the K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually took over SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded by Kim in 2010 and headquartered in Jeju City, Kakao employed over 10,000 people in 2020 and Kim held approximately a 24% stake in the company. At one point, he was the wealthiest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock price dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate that the company can operate effectively without its founder.