A South Korean billionaire and tech industry leader was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of technology giant Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure his presence, as prosecutors were concerned he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim, 58, stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to hinder rival K-pop agency Hybe from acquiring the company. SM Entertainment and Hybe represent two of South Korea’s largest K-pop acts, Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges related to stock manipulation.
Established in 2010 and headquartered in Jeju City, Kakao has become a major player, with Kim holding approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one time, Kim was South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company can thrive without its founder.