A prominent South Korean billionaire and tech entrepreneur was arrested on Tuesday, facing allegations of stock price manipulation linked to a major K-pop agency during a deal from the previous year.
Kim Beom-su, the founder of the tech giant Kakao, has not yet been formally charged. The Seoul Southern District Court approved an arrest warrant amid concerns from prosecutors that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim maintained his innocence, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company deemed the arrest as “unfortunate.”
At age 58, Kim is accused of influencing the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart another major K-pop agency, Hybe, from acquiring it.
Both SM Entertainment and Hybe are among South Korea’s leading K-Pop agencies, with SM representing groups like Aespa and Hybe managing BTS.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, the chief investment officer of Kakao, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim established the company in 2010, based in Jeju City, and held around a 24% stake as of 2020. He was once recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dipped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this situation could be Kakao’s “biggest crisis.” He emphasized the importance of those remaining at the company to demonstrate that it can operate effectively in the absence of its founder.