A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly inflating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of technology company Kakao, has not yet been formally charged. A Seoul Southern District Court issued a warrant for his arrest due to concerns that he might flee the country or destroy evidence.
In a recent meeting at Kakao, Kim denied the accusations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the situation as “unfortunate.”
The 58-year-old is accused of manipulating shares of SM Entertainment in an effort to thwart a takeover attempt by Hybe, another leading K-pop agency.
SM Entertainment and Hybe are two of the largest K-pop entities in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, and he holds approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was South Korea’s richest person, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock dropped by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis.” He emphasized that it would be crucial for those remaining at the company to demonstrate its ability to function effectively without its founder.