A South Korean billionaire and technology leader was arrested on Tuesday for allegedly manipulating stock prices at a prominent K-pop agency during a takeover bid last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. Authorities at the Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
Kim stated during a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described his arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the shares of SM Entertainment in an effort to thwart rival K-pop agency Hybe’s acquisition plans. SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually took over SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao has over a 24% stake held by Kim, who employed more than 10,000 people in 2020. At one time, he was renowned as South Korea’s richest individual, boasting a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock declined by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing the importance of the remaining leadership to ensure the company continues to operate effectively in Kim’s absence.