A South Korean billionaire and tech entrepreneur has been arrested on charges of alleged stock price manipulation involving a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant due to concerns that he could flee the country or destroy evidence.
In a recent company meeting, Kim asserted 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 is accused of manipulating stock related to SM Entertainment during a takeover bid that aimed to thwart Hybe, another leading K-pop agency, from making the acquisition. SM Entertainment and Hybe are two of South Korea’s leading K-Pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, the company’s chief investment officer 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 as of 2020, when the company employed over 10,000 people. At one time, he was considered the richest individual in South Korea, boasting a net worth exceeding $13 billion.
In reaction to the news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday. A professor from Korea University Business School remarked that this incident could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to prove the company can operate effectively without its founder.