A South Korean tech executive and billionaire has been arrested on allegations of stock price manipulation tied to a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet faced formal charges. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
Kim, 58, claimed in a recent company meeting that the allegations are false, asserting that he has never engaged in or supported any illegal activities. Kakao described the arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment during a takeover attempt last year in a bid to thwart Hybe, another major K-pop agency, from acquiring it. SM Entertainment and Hybe represent some of the largest names in the South Korean music industry, including Aespa and BTS.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Kim established Kakao in 2010, and he held approximately a 24% stake in the company as of 2020, which employed over 10,000 people. At one point, Kim was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock price fell by 5%. Experts suggest that this incident could represent a significant challenge for the company. Woochan Kim, a professor at Korea University Business School, indicated that it will be crucial for Kakao’s remaining leadership to demonstrate the company can operate effectively without its founder.