A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant for him amid concerns that he may flee the country or tamper with evidence.
In a staff meeting at Kakao last week, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
At 58 years old, Kim is accused of influencing the stock of SM Entertainment during a takeover attempt last year to prevent rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe represent two of South Korea’s top K-pop acts, Aespa and BTS, respectively.
Ultimately, Kakao acquired SM Entertainment. Additionally, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges last year.
Founded in 2010 and headquartered in Jeju City, Kakao, in which Kim holds approximately a 24% stake, employed more than 10,000 people in 2020. At one time, Kim was South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a business professor at Korea University, remarked that this could represent Kakao’s “biggest crisis.” He emphasized that it will be the responsibility of those remaining at the company to demonstrate its ability to operate effectively without the founder’s presence.