A prominent South Korean billionaire and tech leader was arrested Tuesday on suspicion of manipulating the stock price of a leading K-pop agency during a takeover bid last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued a warrant for his arrest due to concerns that he might flee the country or destroy evidence related to the case.
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.” The company expressed regret over the arrest, labeling it “unfortunate.”
The 58-year-old businessman is accused of manipulating the stock of SM Entertainment as part of a strategy to thwart Hybe, another major player in the K-pop industry, from acquiring it. SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually secured the acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao, in which Kim holds approximately a 24% stake, employed more than 10,000 people as of 2020. At one point, Kim was South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock saw a 5% decline on Tuesday. Woochan Kim, a professor at Korea University Business School, indicated that this incident could represent Kakao’s “biggest crisis,” emphasizing that it will be crucial for the remaining leadership to demonstrate that the company can continue to operate effectively in Kim’s absence.