A South Korean billionaire and technology 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 technology firm Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim, 58, has denied the allegations, stating in a recent staff meeting at Kakao, “I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment in an effort to thwart Hybe, another significant player in the K-pop industry, from acquiring the company. SM Entertainment and Hybe are two of South Korea’s leading K-pop firms, representing popular acts Aespa and BTS, respectively.
Kakao eventually completed its acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was indicted on related stock manipulation charges.
Kim founded Kakao in 2010, with its headquarters in Jeju City. He held approximately a 24% ownership stake in the company, which employed over 10,000 people in 2020. At one point, he was the richest individual in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. An academic at Korea University Business School suggested this could mark Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s resilience in Kim’s absence.