A South Korean billionaire and tech entrepreneur, Kim Beom-su, was arrested on Tuesday for allegedly manipulating stock prices of a major K-pop agency during a deal last year. Kim, who established the technology firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court amid concerns that he could flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is suspected of manipulating the stock of SM Entertainment in connection with a takeover attempt last year, aiming to hinder rival K-pop agency Hybe from acquiring it. Both SM Entertainment and Hybe are among South Korea’s leading K-pop companies, representing popular acts Aespa and BTS, respectively.
Kakao ended up acquiring SM Entertainment, and last year Bae Jae-hyun, Kakao’s chief investment officer, faced indictment on similar stock manipulation charges.
Kim founded Kakao in 2010, which is headquartered in Jeju City, and held a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.” He emphasized the importance for the remaining executives to demonstrate that the company can thrive in the absence of its founder.