A South Korean billionaire and tech executive was arrested on Tuesday for his alleged involvement in stock manipulation at a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has yet to face formal charges, according to reports. Seoul’s Southern District Court issued an arrest warrant out of concern that he might flee the country or destroy evidence related to the case.
Kim has denied the allegations, asserting during a meeting at Kakao that he has never authorized or supported any illegal activities. The company described the arrest as “unfortunate.”
At 58, Kim is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, aiming to thwart another major K-pop agency, Hybe, from acquiring it.
Both SM Entertainment and Hybe are leading K-Pop companies in South Korea, representing popular acts like Aespa and BTS, respectively. Kakao ultimately secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao saw Kim hold a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was considered South Korea’s richest individual, with a net worth exceeding $13 billion.
The announcement of Kim’s arrest led to a 5% decline in Kakao’s stock value on Tuesday. A professor at Korea University Business School remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s ability to thrive in Kim’s absence.