A South Korean billionaire and tech executive 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 Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court has issued an arrest warrant amid concerns from prosecutors that he may flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim denied the allegations, stating, “I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old businessman is accused of distorting the stock of SM Entertainment during a takeover attempt last year to block rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. He was once South Korea’s richest person, with estimated assets exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, suggested that this incident might represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s resilience without its founder.