A South Korean billionaire and tech entrepreneur was apprehended 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 the technology firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating shares of SM Entertainment during a takeover last year to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s top K-Pop companies, representing artists such as Aespa and BTS respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, with the headquarters located in Jeju City. In 2020, the company employed over 10,000 people, and Kim held about a 24% stake in the firm. At one point, he was South Korea’s richest individual, boasting an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing the importance for remaining leadership to demonstrate effective management in Kim’s absence.