A billionaire South Korean tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, a major technology firm, has not yet been formally charged. The Seoul Southern District Court granted an arrest warrant over concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal actions. The allegations are not true,” Kim stated during a recent meeting at Kakao, which described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover last year to obstruct Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe are among the largest companies in South Korea’s K-Pop industry, with notable artists like Aespa and BTS under their management.
Ultimately, Kakao completed the acquisition of SM Entertainment, and last year, Bae Jae-hyun, Kakao’s chief investment officer, was indicted on similar stock manipulation charges.
Founded in 2010 and located in Jeju City, Kakao has grown to employ over 10,000 people as of 2020, with Kim holding approximately a 24% stake. At one point, he was recognized as South Korea’s richest person, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. Professor Woochan Kim from Korea University Business School commented that this could represent Kakao’s most significant crisis, emphasizing the necessity for the remaining leadership to demonstrate that the company can thrive without its founder.