A South Korean billionaire and tech executive has been arrested on charges of allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant to ensure he is taken into custody, as prosecutors are concerned he may flee the country or destroy evidence.
In a recent meeting with staff, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao referred to the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment as part of a strategy to prevent rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe are major players in the K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao succeeded in acquiring SM Entertainment, and last year, the chief investment officer of Kakao, Bae Jae-hyun, was indicted on separate stock manipulation charges.
Founded by Kim in 2010 and headquartered in Jeju City, Kakao employed over 10,000 people in 2020. At one point, Kim was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion. Following the 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,” stating that it will be up to the remaining employees to demonstrate that the company can continue to operate effectively in the founder’s absence.