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 deal 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, as prosecutors expressed concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated in a company meeting last week. Kakao described the arrest as “unfortunate.”
The 58-year-old businessman is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, as part of a strategy to thwart Hybe, another significant K-pop agency, from acquiring SM.
SM Entertainment and Hybe are among South Korea’s largest K-Pop companies, managing high-profile groups like Aespa and BTS.
Kakao eventually acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao has grown significantly, employing over 10,000 people in 2020. Kim previously ranked as South Korea’s richest person, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5%. A professor at Korea University Business School noted that this situation could be Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the firm can operate effectively without its founder.