A prominent South Korean billionaire and tech entrepreneur, Kim Beom-su, was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency last year during a takeover attempt.
Kim, the founder of the tech company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant amid concerns that he might flee the country or compromise evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, insisting on his innocence. The company described his arrest as “unfortunate.”
The allegations suggest that Kim manipulated the stock of SM Entertainment to thwart the acquisition efforts of another K-pop agency, Hybe. SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed its acquisition of SM Entertainment. This incident follows the indictment of Kakao’s chief investment officer, Bae Jae-hyun, on similar stock manipulation charges.
Founded in 2010 by Kim, Kakao is headquartered in Jeju City and had over 10,000 employees in 2020. At one time, Kim was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
In the wake of Kim’s arrest, Kakao’s stock experienced a 5% decline on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing the importance for the remaining management to demonstrate the company’s resilience in Kim’s absence.