A South Korean billionaire and technology magnate 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 to ensure his custody, as prosecutors were concerned he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a company meeting at Kakao last week. The firm described the arrest as “unfortunate.”
Kim, 58, is accused of manipulating the stock of SM Entertainment as part of a strategy to thwart Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, associated with popular groups Aespa and BTS, respectively.
Kakao eventually completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar charges of stock manipulation.
Founded in Jeju City in 2010, Kakao is a major player in the technology sector, with Kim holding approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, Kim was regarded as the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, commented that this may represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate that the company can continue to thrive without its founder.