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, founder of the technology firm Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court amid concerns that he might attempt to flee the country or destroy evidence.
Kim, addressing his staff at Kakao last week, denied the allegations, 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 is accused of affecting the stock value of SM Entertainment during a takeover process to hinder rival K-pop group Hybe from acquiring the company. SM Entertainment and Hybe are among South Korea’s largest K-pop entities, managing artists like Aespa and BTS, respectively.
Kakao eventually took over SM Entertainment. In connection with this case, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation last year.
Kim launched the company in 2010 in Jeju City and has maintained approximately a 24% share in it, which had over 10,000 employees as of 2020. At one point, he was considered South Korea’s wealthiest individual, boasting an estimated net worth exceeding $13 billion.
In response to the arrest news, Kakao’s stock experienced a decline of 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, commented that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for remaining leadership to ensure effective management in the founder’s absence.