A South Korean billionaire and technology leader was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, founder of the tech firm Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim denied the allegations, stating in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of engaging in stock manipulation involving SM Entertainment during a takeover attempt last year, allegedly to thwart the acquisition by Hybe, another key player in the K-pop industry.
SM Entertainment and Hybe are two of South Korea’s largest K-pop firms, representing popular groups like Aespa and BTS. Ultimately, Kakao successfully acquired SM Entertainment. Last year, the chief investment officer of Kakao, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao was led by Kim, who holds approximately 24% of the company. By 2020, Kakao employed over 10,000 people. At one time, Kim was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
In the wake of the arrest, Kakao’s stock fell by 5%. A business professor provided insight, suggesting this might be Kakao’s “biggest crisis,” emphasizing the necessity for the remaining team to demonstrate the company’s capability to function well in the absence of its founder.