A South Korean billionaire and tech executive was apprehended 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 technology giant Kakao, has not yet been formally charged. According to reports, the Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
During a staff meeting last week, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao subsequently described the arrest as “unfortunate.”
The accusations claim that Kim manipulated the stock of SM Entertainment during a takeover to thwart rival K-pop agency Hybe’s attempts to acquire the company.
SM Entertainment and Hybe are among South Korea’s leading K-pop organizations, managing popular groups such as Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment last year. Additionally, Kakao’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges last year.
Founded in 2010 and based in Jeju City, Kakao is a major employer, boasting over 10,000 employees as of 2020. At one time, Kim was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock plummeted by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, stated that this incident could represent Kakao’s “biggest crisis,” emphasizing the importance for remaining executives to demonstrate that the company can continue to thrive in Kim’s absence.