A South Korean billionaire and technology entrepreneur was apprehended on Tuesday over allegations of manipulating the stock price of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court authorized his arrest amid concerns from prosecutors that he might attempt to flee the country or destroy evidence.
Kim, 58, has denied the allegations, stating in a Kakao staff meeting last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
He faces accusations of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular acts Aespa and BTS, respectively. Ultimately, Kakao successfully acquired SM Entertainment. Last year, Kakao’s chief investment officer was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a major player in the tech industry, with Kim holding approximately a 24% stake in the company. In 2020, Kakao employed over 10,000 individuals. Previously, Kim was recognized as South Korea’s richest person, with a net worth exceeding $13 billion.
In response to the arrest, Kakao’s stock price fell by 5% on Tuesday. A business professor noted that this may pose a significant crisis for Kakao, emphasizing the need for the remaining leadership to demonstrate the company can function effectively without its founder.