A prominent South Korean billionaire and technology executive was arrested on Tuesday over allegations of stock price manipulation involving a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not been formally charged yet, according to reports. The Seoul Southern District Court has issued an arrest warrant, citing concerns that he might flee the country or destroy evidence.
Kim denied the allegations during a recent company meeting, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the situation as “unfortunate.”
The accusations suggest that Kim engaged in stock manipulation of SM Entertainment as part of efforts to thwart its acquisition by Hybe, another key player in the K-pop industry.
SM Entertainment and Hybe are major names in the South Korean music scene, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment last year. Additionally, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges last year.
Kim, aged 58, started Kakao in 2010. He reportedly holds a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one time, he was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this incident could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s resilience in Kim’s absence.