A South Korean billionaire and tech entrepreneur has been arrested on charges of allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. According to reports, the Seoul Southern District Court authorized the arrest due to concerns that he might flee the country or destroy evidence.
Kim has denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a staff meeting at Kakao. The company described his arrest as “unfortunate.”
The 58-year-old businessman is suspected of attempting to influence the stock of SM Entertainment during a takeover last year to thwart Hybe, another major K-pop agency, from acquiring it. SM Entertainment and Hybe are among the leading K-pop companies in South Korea, representing popular groups such as Aespa and BTS.
Kakao eventually succeeded in acquiring SM Entertainment, and last year, the chief investment officer of Kakao, Bae Jae-hyun, was also indicted for stock manipulation.
Kim founded Kakao, which is based in Jeju City, in 2010 and held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock saw a decline of 5%. An expert from Korea University Business School commented that this situation could represent Kakao’s “biggest crisis,” emphasizing the importance for the remaining leadership to demonstrate that the company can operate effectively without its founder.