A prominent South Korean billionaire and technology entrepreneur was arrested on Tuesday on suspicions of stock price manipulation concerning a major K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet been officially charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim, aged 58, publicly declared his innocence during a staff meeting at Kakao last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company has described the situation as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment in connection with a takeover last year, allegedly to thwart a bid by Hybe, another leading K-pop agency.
SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing groups Aespa and BTS, respectively. Kakao ultimately secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was indicted on similar stock manipulation charges.
Since founding Kakao in Jeju City in 2010, Kim has maintained about a 24% stake in the company, which employed over 10,000 people in 2020. At one time, he was considered South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock experienced a 5% drop on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” suggesting that it is now up to the remaining leadership to demonstrate the company’s resilience in Kim’s absence.