A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. According to reports, the Seoul Southern District Court issued an arrest warrant for him due to concerns that he might flee the country or destroy evidence.
Kim maintains that the allegations against him are false, asserting, “I have never instructed or condoned any illegal acts,” during a recent meeting with Kakao staff. The company described the arrest as “unfortunate.”
At 58, Kim is accused of manipulating the stock of SM Entertainment as part of a scheme to block another significant K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are two of South Korea’s premier K-pop entities, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao succeeded in acquiring SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao has grown significantly, employing over 10,000 individuals as of 2020. At one time, Kim was considered South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, commented that this could represent Kakao’s “biggest crisis” and emphasized the necessity for the remaining company leadership to demonstrate that the firm can continue to operate effectively in Kim’s absence.