A prominent South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a deal that took place last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. According to reports, an arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence.
During a staff meeting at Kakao last week, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company characterized the arrest as “unfortunate.”
At 58 years old, Kim faces accusations of manipulating the stock of SM Entertainment amid a takeover attempt last year, which was allegedly part of a scheme to thwart Hybe, another major player in the K-pop industry.
SM Entertainment and Hybe represent two of the largest K-pop companies in South Korea, with Aespa under SM and BTS under Hybe.
Ultimately, Kakao completed the acquisition of SM Entertainment. Moreover, last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010 in Jeju City and retains approximately a 24% stake in the company, which employed more than 10,000 people as of 2020. At one point, he was recognized as South Korea’s richest 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, noted that this could represent Kakao’s “biggest crisis.” He emphasized the importance for remaining company leaders to demonstrate that it can continue to operate effectively in the founder’s absence.