A South Korean billionaire and tech executive has been arrested for allegedly manipulating the stock prices of 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 for Kim amid concerns that he might attempt to flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
Kim is criticized for his role in manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to block rival agency Hybe from acquiring it. Both SM Entertainment and Hybe are significant players in the K-pop industry, representing popular groups such as Aespa and BTS.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a significant company in South Korea, employing over 10,000 people as of 2020. At one point, Kim was the richest person in South Korea, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a business professor at Korea University, remarked that this could be Kakao’s “biggest crisis,” emphasizing the importance for the remaining leadership to demonstrate the company’s stability without its founder.