A South Korean billionaire and tech executive 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 the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant to ensure his custody, as prosecutors expressed concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two of South Korea’s leading K-Pop entities, representing successful groups like Aespa and BTS.
Kakao ultimately completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao had over 10,000 employees in 2020, with Kim holding approximately a 24% stake in the company. At one point, he was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the announcement of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis,” emphasizing the need for the remaining executives to demonstrate the company’s resilience in the absence of its founder.