A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not been formally charged, according to reports. The Seoul Southern District Court granted an arrest warrant over concerns that he might flee the country or destroy evidence.
In a recent meeting with staff, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao referred to the situation as “unfortunate.”
Kim, 58, is accused of engaging in stock manipulation involving SM Entertainment as part of a strategy to block rival K-pop agency Hybe from acquiring it. Both SM Entertainment and Hybe are major players in the K-pop industry, representing popular groups Aespa and BTS, respectively.
Eventually, Kakao secured the acquisition of SM Entertainment. Previously, Bae Jae-hyun, Kakao’s chief investment officer, was indicted on similar stock manipulation charges.
Kim established Kakao, headquartered in Jeju City, in 2010 and holds approximately a 24% stake in the company, which boasted over 10,000 employees in 2020. At one time, he was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. A business professor at Korea University commented that this could mark “Kakao’s biggest crisis,” and noted that it is now up to those remaining at the firm to demonstrate that it can operate successfully without its founder.