A South Korean billionaire and technology entrepreneur was apprehended 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 amid concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a meeting at Kakao last week. Kakao later referred to the arrest as “unfortunate.”
At 58 years old, Kim faces accusations of manipulating the stock of SM Entertainment in connection with a takeover attempt last year, aimed at hindering rival Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, managing popular groups like Aespa and BTS, respectively. Ultimately, Kakao completed the acquisition of SM Entertainment. Previously, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao is a major player in the tech industry. Kim has maintained around a 24% ownership stake and the company employed over 10,000 staff members as of 2020. 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 fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.” He noted that it will be up to the remaining leadership at the company to demonstrate its ability to operate effectively in Kim’s absence.