A prominent South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating stock prices of a major K-pop agency during a transaction last year.
Kim Beom-su, the founder of 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 flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, labeling the allegations as untrue. Kakao characterized the arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment during a takeover attempt last year to thwart Hybe, another significant K-pop agency, from acquiring it. SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups like Aespa and BTS.
Ultimately, Kakao completed its acquisition of SM Entertainment. Additionally, last year, Bae Jae-hyun, Kakao’s chief investment officer, faced indictment on similar stock manipulation charges.
Since its establishment in 2010 and headquartered in Jeju City, Kakao has grown significantly, with Kim holding approximately a 24% share of the company, which employed over 10,000 people as of 2020. At one point, he was considered South Korea’s richest individual, with an estimated wealth of over $13 billion.
Following the news of his arrest, Kakao’s stock price dropped by 5%. Professor Woochan Kim from Korea University Business School remarked that this could be Kakao’s “biggest crisis,” emphasizing the necessity for remaining executives to demonstrate the company’s capability to operate effectively without its founder.