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 takeover 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 for him amid concerns that he could flee the country or destroy evidence. In a staff meeting at Kakao last week, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
Kim, who is 58 years old, is accused of attempting to manipulate the stock of SM Entertainment in a bid to thwart rival Hybe’s plan to acquire the company. SM Entertainment and Hybe are two of South Korea’s leading K-pop agencies, overseeing popular acts like Aespa and BTS.
Kakao eventually completed its acquisition of SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar charges of stock manipulation.
Founded by Kim in 2010 and based in Jeju City, Kakao is a major player in the tech sector, employing over 10,000 people as of 2020. Kim was at one time South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock experienced a 5% decline on Tuesday. Business professor Woochan Kim, from Korea University Business School, remarked that this situation could be Kakao’s most significant crisis, emphasizing that it will be crucial for the remaining leadership to demonstrate the company’s ability to operate effectively in Kim’s absence.