A South Korean billionaire and tech entrepreneur was arrested on Tuesday for reportedly manipulating the stock price of a significant 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 to ensure his custody, as prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent staff meeting at Kakao. The company described the arrest as “unfortunate.”
The 58-year-old is accused of engaging in stock manipulation related to SM Entertainment as part of a strategy to thwart another major K-pop company, Hybe, from acquiring it. SM Entertainment and Hybe are two of South Korea’s largest K-pop firms, managing popular groups Aespa and BTS, respectively.
Kakao ultimately acquired SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao had over 10,000 employees in 2020 and Kim owned about a 24% stake in the company. He was once considered the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, commented that this could represent Kakao’s “biggest crisis.” He noted that it would be up to those remaining at the company to demonstrate its ability to function effectively without the founder.