A prominent South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a takeover bid last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court authorized his arrest amid concerns that he might flee the country or destroy evidence linked to the allegations.
In a recent staff meeting at Kakao, Kim denied the accusations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of artificially influencing the stock of SM Entertainment during a takeover attempt last year to thwart another major K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe, which represent popular K-pop acts Aespa and BTS respectively, are among the largest companies in the industry.
Ultimately, Kakao successfully acquired SM Entertainment, but last year, Kakao’s chief investment officer was indicted on similar stock manipulation charges.
Kim founded Kakao in 2010, and by 2020, the company, based in Jeju City, provided employment to over 10,000 people. At one point, he was regarded as South Korea’s wealthiest individual, with an estimated fortune exceeding $13 billion. Following the news of Kim’s arrest, Kakao’s stock dropped by 5%.
A professor at Korea University Business School highlighted the severity of the situation, calling it potentially Kakao’s “biggest crisis” and emphasized the need for the remaining leadership to prove the company can thrive without its founder.