A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock value of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been formally charged. A Seoul Southern District Court issued an arrest warrant for him amid concerns that he might flee the country or destroy evidence. Kim declared his innocence during a staff meeting at Kakao, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment as part of a scheme to thwart rival K-pop agency Hybe from acquiring it. Both SM Entertainment and Hybe are major players in the K-Pop industry, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010 in Jeju City and holds about a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was the richest person in South Korea, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing the importance for those remaining at the company to demonstrate that it can manage successfully without its founder.