A South Korean billionaire and technology executive was arrested on Tuesday 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, according to reports. The Seoul Southern District Court has issued an arrest warrant, expressing concerns that he may attempt to flee the country or destroy evidence.
Kim publicly denied the allegations in a staff meeting last week, 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 businessman is accused of engaging in stock manipulation regarding SM Entertainment during a takeover bid last year, allegedly to prevent competitor Hybe, another leading K-pop agency, from acquiring the company.
SM Entertainment and Hybe are among South Korea’s largest K-pop entities, representing notable groups such as Aespa and BTS.
Kakao eventually completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on similar charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao has seen Kim maintain approximately a 24% ownership stake. The company employed over 10,000 individuals in 2020, and at one point, Kim was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock prices dropped by 5%. 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 demonstrate the company’s resilience in Kim’s absence.