A prominent South Korean billionaire and tech industry leader was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court authorized an arrest warrant, expressing concerns that he might flee the country or attempt to destroy evidence.
Kim stated during a company meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the shares of SM Entertainment in an effort to thwart the acquisition by rival K-pop agency Hybe, another leading player in the industry.
SM Entertainment and Hybe are two of the largest K-Pop entities in South Korea, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao secured the acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people by 2020. He was once considered South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the arrest, Kakao’s stock dropped by 5%.
Woochan Kim, a business school professor at Korea University, indicated that this situation could represent “the biggest crisis” for Kakao. “The burden will be on those who remain at the company to demonstrate that it can continue to operate effectively without its founder,” he remarked.