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 deal 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 amid concerns that he might flee the country or destroy evidence.
Kim, 58, denies the allegations, stating in a staff meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao referred to the arrest as “unfortunate.”
He is accused of engaging in stock manipulation involving SM Entertainment during a takeover attempt last year to thwart another major K-pop agency, Hybe, from acquiring it. Both SM Entertainment and Hybe are significant players in the South Korean K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, but last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Kim founded Kakao in 2010 and holds about a 24% stake in the company, which had over 10,000 employees in 2020. At one point, he was recognized as South Korea’s richest 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 situation could represent “Kakao’s biggest crisis.” He emphasized that it would now be crucial for the remaining team at Kakao to demonstrate the company’s operational stability in the founder’s absence.