A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock prices of a major K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant amid concerns that he might flee the country or destroy evidence, according to reports. In a recent staff meeting at Kakao, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao expressed disappointment over the arrest while emphasizing their belief in Kim’s innocence.
The 58-year-old is accused of manipulating the stock of SM Entertainment in connection with Kakao’s acquisition of the company, effectively thwarting competitor Hybe’s attempts to take over SM. SM Entertainment and Hybe are notable players in the K-Pop industry, representing popular groups such as Aespa and BTS.
Kakao successfully acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Kim founded Kakao in 2010 and holds a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one point, he was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion. Following the news of his arrest, Kakao’s stock fell by 5%.
Woochan Kim, a professor at Korea University Business School, suggested that this situation may represent “Kakao’s biggest crisis.” He emphasized that it is imperative for the remaining leaders at the company to demonstrate effective management in Kim’s absence.