A prominent South Korean billionaire and tech entrepreneur was apprehended on Tuesday for allegedly manipulating the stock price of a significant K-pop agency during a deal last year.
Kim Beom-su, the founder of technology giant Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence.
Kim denied the allegations during a recent 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.”
The 58-year-old is accused of manipulating SM Entertainment’s stock in connection with a takeover bid last year, aimed at thwarting a competing acquisition by Hybe, another leading K-pop agency.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded in 2010 and based in Jeju City, Kakao saw Kim holding approximately a 24% stake as of 2020, at which time the company employed over 10,000 individuals. Kim was once the wealthiest person in South Korea, with a net worth exceeding $13 billion.
In response to the news of his arrest, Kakao’s stock fell 5% on Tuesday. According to Woochan Kim, a professor at Korea University Business School, this could represent Kakao’s “biggest crisis.”
He emphasized that it is now up to the remaining company leadership to demonstrate that Kakao can continue to thrive without its founder.