A South Korean billionaire and 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, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or tamper with evidence.
Kim has denied the allegations, stating during a staff meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao referred to the arrest as “unfortunate.”
The 58-year-old businessman is accused of manipulating the stock of SM Entertainment to thwart a takeover attempt by another major K-pop agency, Hybe. SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and previously, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges.
Founded in 2010 in Jeju City, Kakao, where Kim holds about a 24% stake, employed over 10,000 people as of 2020. At one time, Kim was South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.” He emphasized the importance for the remaining leadership at the company to demonstrate its capability to function effectively in Kim’s absence.