A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a previous acquisition attempt.
Kim Beom-su, the founder of technology company Kakao, has not yet been formally charged. A Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
Kim has publicly denied the allegations, stating in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao referred to the arrest as “unfortunate.”
The 58-year-old businessman is accused of interfering with the stock of SM Entertainment during a takeover bid last year to thwart Hybe, another major K-pop agency, from acquiring it. SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao saw Kim retain approximately 24% ownership and had over 10,000 employees as of 2020. He was once South Korea’s wealthiest individual, with an estimated fortune exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis,” emphasizing that it is up to the remaining executives to demonstrate the company’s resilience in the absence of its founder.