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 transaction 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 issued an arrest warrant, with prosecutors expressing concerns that he might flee the country or attempt to destroy evidence.
In a staff meeting at Kakao last week, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover last year to thwart Hybe, another significant K-pop agency, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-Pop companies, representing popular groups like Aespa and BTS.
Kakao eventually took over SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges related to stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao is a major player in South Korea’s tech landscape, with Kim holding approximately a 24% stake in the company. In 2020, Kakao employed over 10,000 people, and Kim was previously the richest person in South Korea, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, commented that this could represent Kakao’s “biggest crisis,” emphasizing the importance for remaining company leadership to demonstrate effective management in Kim’s absence.