A South Korean billionaire and tech leader, Kim Beom-su, was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year. The Seoul Southern District Court issued an arrest warrant for Kim, the founder of technology firm Kakao, as prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim, 58, has not yet been officially charged. He denied the allegations during a staff meeting at Kakao, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
He is accused of engaging in stock manipulation related to SM Entertainment during a takeover attempt last year, aimed at hindering rival K-pop agency Hybe from acquiring the company. Both SM Entertainment and Hybe are significant players in the South Korean music industry, representing popular groups such as Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges. Kim Beom-su founded Kakao in 2010 and held a 24% stake in the company, which employed over 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 news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s capability to operate effectively without its founder.