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 deal last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court to ensure his custody, as prosecutors expressed concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company referred to the arrest as “unfortunate.”
The 58-year-old is accused of artificially influencing the stock of SM Entertainment amid a takeover attempt last year, allegedly to thwart Hybe, another leading K-pop company, from acquiring it. SM Entertainment and Hybe are among the largest K-Pop entities in the country, representing popular groups such as Aespa and BTS.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Kim founded Kakao in 2010, with its headquarters in Jeju City. He holds about a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, noted this could be Kakao’s “biggest crisis,” emphasizing the remaining leadership’s responsibility to demonstrate the company’s resilience in Kim’s absence.