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. An arrest warrant was issued by the Seoul Southern District Court, with prosecutors expressing concerns that he might flee the country or destroy evidence.
Kim has publicly denied the allegations, stating during a staff meeting at Kakao last week that he has never authorized or supported any unlawful activities. The company characterized his arrest as “unfortunate.”
At age 58, Kim is accused of inflating the stock of SM Entertainment during a takeover attempt last year in a bid to thwart Hybe, another significant player in the K-pop industry.
SM Entertainment and Hybe are among South Korea’s largest K-pop firms, representing popular groups Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun faced similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao has seen Kim maintain approximately a 24% ownership stake. The company employed over 10,000 individuals as of 2020. At one point, Kim was considered South Korea’s richest individual, boasting an estimated net worth exceeding $13 billion.
Following the arrest news, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate that the company can continue to operate effectively without its founder.