A South Korean billionaire and tech entrepreneur, Kim Beom-su, was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year. Kim, the founder of the tech company Kakao, has not yet been formally charged, but the Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
In a recent staff meeting, Kim denied the allegations, 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 the stock of SM Entertainment amid a takeover bid last year, allegedly to thwart another major K-pop company, Hybe, from acquiring it. SM Entertainment and Hybe are two of South Korea’s leading K-pop firms, representing popular groups such as Aespa and BTS.
Kakao eventually acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao, where Kim holds a roughly 24% stake, employed over 10,000 people by 2020. At one point, he was considered South Korea’s wealthiest individual, with an estimated 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 that it will be essential for the company’s remaining leaders to demonstrate its ability to operate effectively in Kim’s absence.