A South Korean billionaire and tech entrepreneur was arrested 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 Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court amid concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old is accused of engaging in stock manipulation related to SM Entertainment during a takeover attempt last year, allegedly to thwart Hybe, another leading K-pop agency, from acquiring it.
Both SM Entertainment and Hybe are major players in South Korea’s K-pop industry, representing artists such as Aespa and BTS, respectively. Kakao eventually acquired SM Entertainment, and last year, Bae Jae-hyun, Kakao’s chief investment officer, was also charged in connection with stock manipulation.
Kim founded Kakao, which is based in Jeju City, in 2010. He holds approximately a 24% stake in the company, which had over 10,000 employees in 2020. At one time, he was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, commented that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to ensure the company continues to operate effectively in Kim’s absence.