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 deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant, citing concerns that he might flee the country or destroy evidence.
Kim, 58, has denied the allegations, stating in a recent staff meeting at Kakao that he has never instructed or supported any illegal actions. The company expressed that the arrest is “unfortunate.”
He is accused of manipulating the stock of SM Entertainment as part of a scheme to block another major K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a major employer in South Korea, with over 10,000 employees reported in 2020. At one point, Kim was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5%. A business professor at Korea University noted that this situation could represent Kakao’s “biggest crisis” and emphasized that it will be crucial for the remaining leadership to demonstrate the company’s capability to operate effectively without its founder.