A South Korean billionaire and technology entrepreneur 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 the tech firm Kakao, has not yet been formally charged. A Seoul Southern District Court issued an arrest warrant to ensure his custody due to concerns that he might flee the country or destroy evidence.
Kim asserted his innocence in a recent staff meeting at Kakao, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment during a takeover involving a scheme aimed at thwarting Hybe, another leading K-pop company, from acquiring it. SM Entertainment and Hybe represent some of the largest names in the K-pop industry, including Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, while last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, with its headquarters located in Jeju City. He held approximately a 24% stake in the company, which employed over 10,000 individuals in 2020. At one point, he was considered the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the 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 may represent Kakao’s “biggest crisis,” highlighting the challenge for the remaining management to demonstrate that the company can continue to operate effectively in the founder’s absence.