A South Korean billionaire and tech entrepreneur was apprehended on Tuesday for purportedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of technology giant Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim asserted his innocence, saying, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover last year. This alleged scheme was aimed at thwarting a bid from Hybe, another leading K-pop agency.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, known for managing popular groups Aespa and BTS, respectively.
Kakao ultimately completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, with the headquarters located in Jeju City. He held about a 24% stake in the company, which employed over 10,000 individuals in 2020. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated net worth surpassing $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.” He emphasized that it would now be up to the remaining executives to demonstrate that the company can operate effectively without its founder present.