A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock prices of a prominent K-pop agency during a takeover attempt last year.
Kim Beom-su, the founder of Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court issued an arrest warrant for his detention, with prosecutors expressing concerns that he might flee the country or destroy evidence related to the case.
Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent staff meeting at Kakao. The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment to thwart Hybe, another significant K-pop agency, from acquiring it. Both SM Entertainment and Hybe are major players in the South Korean K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao ended up acquiring SM Entertainment, and last year, Bae Jae-hyun, the chief investment officer of Kakao, was also indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao was established by Kim, who held a 24% stake in the company, which employed over 10,000 individuals in 2020. At one point, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, stated this situation could represent Kakao’s “biggest crisis,” emphasizing the need for company leaders to demonstrate effective management in the founder’s absence.