A prominent South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been charged formally. The Seoul Southern District Court issued an arrest warrant for him amid concerns that he might flee the country or destroy evidence.
In a staff meeting last week, Kim asserted that the allegations are false, stating, “I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year in order to thwart Hybe, another major K-pop agency, from acquiring it. SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing Aespa and BTS, respectively.
Kakao eventually completed 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 employs over 10,000 people, and Kim holds approximately a 24% stake in the company. At one time, he was South Korea’s richest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing that it is up to the remaining executives to prove the company’s ability to function effectively without its founder.