A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him out of concern that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated in a staff meeting at Kakao last week. The company expressed that the arrest was “unfortunate.”
The 58-year-old is accused of stock manipulation involving SM Entertainment during its takeover last year, aiming to thwart another K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among South Korea’s leading K-pop firms, associated with artists like Aespa and BTS, respectively.
Ultimately, Kakao completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on related stock manipulation charges.
Kim established Kakao, which is based in Jeju City, in 2010. He owns approximately a 24% stake in the company, which employed over 10,000 individuals in 2020. At one time, he was South Korea’s wealthiest person, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, noted that this situation could represent Kakao’s “biggest crisis.”
“It will be important for those remaining in the company to demonstrate that it can operate effectively without the founder,” he commented.