A South Korean billionaire and technology entrepreneur has been arrested on allegations of manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of technology company Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company expressed that the arrest is “unfortunate.”
The 58-year-old is accused of stock manipulation involving SM Entertainment during a takeover attempt last year, allegedly to prevent rival K-pop agency Hybe from acquiring it. Both SM Entertainment and Hybe are leading players in the South Korean K-pop industry, representing groups like Aespa and BTS.
Kakao eventually succeeded in acquiring SM Entertainment. Notably, last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao, in which Kim holds approximately a 24% stake, employed over 10,000 people as of 2020. At one time, Kim was recognized as South Korea’s wealthiest individual, with an estimated wealth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday. According to Woochan Kim, a professor at Korea University Business School, this situation could represent “Kakao’s biggest crisis.” He emphasized the importance for the remaining leadership to demonstrate that the company can continue to operate effectively without its founder.