A billionaire and prominent tech figure from South Korea was arrested on Tuesday amid allegations of stock price manipulation involving a major K-pop agency during a deal that took place last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court as prosecutors expressed concerns that he might flee the country or destroy evidence related to the case.
Kim asserted his innocence in a recent staff meeting at Kakao, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are among the largest K-Pop companies in South Korea, representing well-known groups like Aespa and BTS, respectively. Kakao ended up acquiring SM Entertainment, while last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted for similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao, in which Kim holds approximately a 24% stake, employed over 10,000 people by 2020. At one time, Kim was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
In the wake of the arrest, Kakao’s stock dropped by 5%. A professor from Korea University Business School suggested that this situation could represent Kakao’s “biggest crisis,” emphasizing that it will be vital for the remaining leadership to demonstrate the company’s resilience in the founder’s absence.