A South Korean billionaire and tech entrepreneur has been arrested for allegedly manipulating the stock prices of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court authorized the arrest amid concerns that he might flee the country or destroy evidence linked to the allegations.
In a recent staff meeting at Kakao, Kim denied the accusations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” In response to his arrest, Kakao described the situation as “unfortunate.”
The 58-year-old entrepreneur is accused of intervening in the stock of SM Entertainment during a takeover process last year in a bid to thwart rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe are two of the largest K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, while 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 is a major technology player in South Korea, with Kim holding around a 24% stake in the company. As of 2020, Kakao employed over 10,000 people, and Kim was once recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, suggested that this incident could represent Kakao’s “biggest crisis.” He emphasized the need for the remaining leadership at the company to demonstrate its ability to function effectively in Kim’s absence.