A prominent South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech giant Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence.
In a recent staff meeting, Kim asserted his innocence, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
At 58 years old, Kim faces accusations of stock manipulation involving SM Entertainment during a takeover bid meant to thwart Hybe, another major player in the K-pop industry.
Both SM Entertainment and Hybe are among the largest K-pop enterprises in South Korea, representing popular acts like Aespa and BTS.
Kakao successfully acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded by Kim in 2010 and headquartered in Jeju City, Kakao is a major employer with over 10,000 staff members as of 2020. At one time, Kim was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, indicated that this situation could represent Kakao’s “biggest crisis.” He emphasized the importance for the company’s remaining leadership to demonstrate that it can continue to operate effectively without its founder.