A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court issued an arrest warrant, and prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim, 58, denied the allegations, asserting during a staff meeting at Kakao last week that he has never approved or participated in any illegal activities. Kakao described the arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment during a takeover attempt, aiming to thwart Hybe, another leading K-pop company, from acquiring it. SM Entertainment and Hybe are key players in the K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, the company’s chief investment officer was indicted on similar stock manipulation charges.
Established in 2010, Kakao is based in Jeju City, and Kim holds approximately a 24% stake in the company, which had over 10,000 employees as of 2020. At one point, Kim 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% on Tuesday. A professor at Korea University Business School noted that this situation could represent “Kakao’s biggest crisis,” emphasizing that it will be crucial for the remaining leadership to demonstrate the company’s resilience without its founder.