A South Korean billionaire and tech leader has been arrested on Tuesday amid allegations of stock manipulation involving 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 has issued an arrest warrant, as prosecutors expressed concerns that he might attempt to flee the country or destroy evidence.
Kim denied the allegations, asserting in a recent staff meeting at Kakao that he has never engaged in or supported any illegal activities. The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating stock prices of SM Entertainment during a takeover attempt last year, aimed at thwarting Hybe, another key player in the K-pop industry, from acquiring the company.
Both SM Entertainment and Hybe are leading K-pop firms in South Korea, representing popular acts such as Aespa and BTS, respectively.
Ultimately, Kakao secured the acquisition of SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Established in 2010 and based in Jeju City, Kakao employs over 10,000 people and Kim holds roughly a 24% stake in the company. At one point, he was regarded as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, stated that this could represent Kakao’s “biggest crisis,” emphasizing that it will be crucial for the remaining leadership to demonstrate that the company can operate effectively without its founder.