A billionaire South Korean tech executive was arrested on Tuesday for reportedly manipulating the stock price of a prominent K-pop agency during a transaction 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, citing concerns that he might flee the country or destroy evidence.
Kim has publicly denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts” during a staff meeting at Kakao last week. The company referred to his arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment during a takeover bid last year in a bid to thwart Hybe, another major K-pop agency, from acquiring it.
SM Entertainment and Hybe are two leading K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun faced similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a major player in the tech industry, with Kim owning approximately 24% of the company, which employed over 10,000 people in 2020. At one point, he was recognized as South Korea’s wealthiest individual, boasting an estimated net worth exceeding $13 billion.
Following the arrest news, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested that this could represent Kakao’s “biggest crisis.” He emphasized the need for those remaining at the company to demonstrate its capability to operate effectively without the founder’s presence.