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 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 for him amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim stated in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” 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 block Hybe, another significant K-pop agency, from acquiring it. SM Entertainment and Hybe are two of the leading K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired 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 major player in the tech industry, with Kim owning approximately a 24% stake in the company and an employee count exceeding 10,000 as of 2020. At one time, Kim was considered South Korea’s richest individual, with a net worth surpassing $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a business professor at Korea University, remarked that this could be Kakao’s “biggest crisis,” emphasizing that it would now be up to those remaining in the company to demonstrate its operational capability without its founder.