A prominent South Korean billionaire and technology executive was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology company Kakao, has not yet been formally charged. A Seoul Southern District Court issued an arrest warrant for him amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim denied the accusations during a recent staff meeting at Kakao, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao expressed that the arrest was “unfortunate.”
The 58-year-old Kim is accused of manipulating the stock of SM Entertainment during a takeover bid last year, allegedly to obstruct Hybe, another major K-pop agency, from acquiring it.
Both SM Entertainment and Hybe are among South Korea’s leading K-pop companies, representing popular acts such as Aespa and BTS.
Kakao eventually completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on related stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a significant player in the tech industry, with Kim holding about a 24% stake in the company, which employed over 10,000 people in 2020. He was once considered South Korea’s richest person, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock price dropped by 5%. A professor at Korea University Business School remarked that this could represent Kakao’s “biggest crisis,” suggesting it will be up to the remaining leadership to demonstrate the company’s capability to thrive without its founder.