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 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 over concerns that he might flee the country or destroy evidence.
Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent meeting at Kakao. The company described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating shares of SM Entertainment during a takeover last year, reportedly to prevent rival K-pop agency Hybe from acquiring the company. SM Entertainment and Hybe are two of the largest K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately completed the acquisition of SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Kim founded Kakao, which is based in Jeju City, in 2010. As of 2020, the company had over 10,000 employees, and Kim held approximately a 24% stake. At one point, he was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate that the company can continue to function effectively in Kim’s absence.