A South Korean billionaire and technology mogul was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence, according to reports.
Kim has publicly 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.” Kakao described the arrest as “unfortunate.”
The 58-year-old businessman is accused of impacting the stock of SM Entertainment during a takeover attempt in order to thwart another major K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are among South Korea’s largest K-pop firms, representing artists like Aespa and BTS, respectively.
Kakao eventually succeeded in purchasing 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 is a significant technological company in South Korea, with Kim holding approximately a 24% stake and employing over 10,000 people as of 2020. At one point, Kim was considered the richest person in South Korea, with a net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock fell by 5%. Business professor Woochan Kim from Korea University Business School remarked that this could be Kakao’s “biggest crisis,” emphasizing the importance of the remaining leadership in maintaining the company’s stability without its founder.