A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a takeover last year.
Kim Beom-su, the founder of Kakao, has yet to be formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant due to 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, describing the allegations as untrue. The company commented that his arrest is “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover battle last year to hinder Hybe, another leading K-pop agency, from acquiring the company. SM Entertainment and Hybe are two major players in the K-pop industry, representing groups like Aespa and BTS, respectively.
Ultimately, Kakao successfully acquired SM Entertainment. In a related case, last year, Kakao’s chief investment officer was indicted on stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao was led by Kim, who holds approximately 24% of the company. It employed over 10,000 people in 2020 and at one point, Kim was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5%. An academic expert suggested that this situation may represent Kakao’s most significant crisis, emphasizing that it is now up to the remaining team to demonstrate the company’s capability to function effectively in the absence of its founder.