A prominent South Korean billionaire and tech leader has been arrested for allegedly manipulating the stock price of a well-known K-pop agency during a deal last year.
Kim Beom-su, who is the founder of the tech giant Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued a warrant for his arrest amid concerns from prosecutors that he might flee the country or destroy evidence.
In a recent meeting with staff, Kim maintained his innocence, 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 manipulating the stock of SM Entertainment in connection with a takeover attempt last year. This alleged scheme was purportedly aimed at thwarting a competing acquisition by Hybe, another leading K-pop agency.
Both SM Entertainment and Hybe are major players in the South Korean music industry, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao managed to acquire SM Entertainment, but last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao was once led by Kim, who held a roughly 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock experienced a 5% drop on Tuesday.
Experts weigh in, with Woochan Kim, a professor at Korea University Business School, suggesting that this could be Kakao’s “biggest crisis.” He emphasized the importance for remaining company leadership to demonstrate effective management in Kim’s absence.