A prominent South Korean billionaire and technology leader was arrested on Tuesday over allegations of stock price manipulation related to a significant K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been formally charged, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant, with prosecutors expressing concerns that he might attempt to flee the country or destroy evidence.
Kim insisted in a staff meeting at Kakao last week that the allegations are false, emphasizing that he never authorized or supported any illegal activities. The company described the arrest as “unfortunate.”
The allegations suggest that the 58-year-old Kim attempted to manipulate the stock of SM Entertainment during a takeover attempt to hinder Hybe, another major K-pop agency, from acquiring it.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing prominent groups Aespa and BTS, respectively. Ultimately, Kakao acquired SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on similar stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao is significantly impacted by Kim, who holds approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one time, he ranked as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” noting that it will be crucial for those remaining at the company to demonstrate its viability without the founder.