A billionaire South Korean tech entrepreneur has been arrested on allegations of stock manipulation concerning a major K-pop agency during a previous acquisition deal.
Kim Beom-su, the founder of the technology company Kakao, has not yet been formally charged. The Seoul Southern District Court approved an arrest warrant for him amid concerns that he might flee the country or destroy evidence.
In a recent meeting at Kakao, 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.”
The 58-year-old entrepreneur is accused of influencing the stock value of SM Entertainment during a takeover last year, as part of an effort to block rival K-pop agency Hybe from acquiring the company.
SM Entertainment and Hybe are leading players in South Korea’s K-pop industry, representing major groups such as Aespa and BTS. Ultimately, Kakao succeeded in acquiring SM Entertainment, although last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded in 2010, Kakao is based in Jeju City and, as of 2020, employed over 10,000 people. Kim, who holds about a 24% stake in the company, was once the wealthiest individual in South Korea, with a net worth surpassing $13 billion.
Following news of Kim’s arrest, Kakao’s stock fell by 5%. A professor from Korea University Business School remarked that this incident could pose a significant challenge for Kakao. He emphasized the importance for the remaining leadership to demonstrate that the company can operate effectively without its founder.