A billionaire South Korean tech entrepreneur has been arrested for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet been formally charged. The Seoul Southern District Court has issued an arrest warrant for him amid concerns from prosecutors regarding the possibility of him fleeing the country or destroying evidence.
In a meeting last week, Kim denied the allegations, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” His company described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment last year to thwart a takeover by Hybe, another leading K-pop agency. SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular groups such as Aespa and BTS.
Kakao successfully acquired SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted for stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a major player in the tech industry, with Kim holding approximately a 24% stake in the company. It employed over 10,000 people in 2020, and Kim was once recognized as South Korea’s richest individual, with his net worth surpassing $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis,” highlighting the importance for the remaining team to demonstrate that the company can operate effectively without its founder.