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 takeover attempt last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he might flee the country or destroy evidence.
In response to the claims, Kim stated in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of engaging in stock manipulation involving SM Entertainment to thwart rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe are recognized as two of South Korea’s leading K-pop companies, representing major groups such as Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges.
Kim founded Kakao in 2010, and he retains approximately a 24% stake in the company, which employed over 10,000 people as of 2020. He was once South Korea’s richest individual, with a net worth exceeding $13 billion. Following the news of his arrest, Kakao’s stock dropped by 5%.
Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis,” emphasizing the importance for remaining executives to demonstrate that the company can continue to function effectively without its founder.