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 deal last year. Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant amid concerns that he might flee the country or destroy evidence.
In a recent staff meeting, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” while Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment during a takeover last year to thwart Hybe, another significant K-pop agency, from acquiring it. SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Notably, last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded in 2010 in Jeju City, Kakao, in which Kim owns about a 24% stake, employed over 10,000 people as of 2020. At one point, Kim was considered South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing the importance of the remaining leadership in demonstrating the company’s ability to operate effectively without its founder.