A billionaire and technology leader from South Korea was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns over the possibility of him fleeing the country or destroying evidence.
In a recent staff meeting at Kakao, Kim asserted, “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 entrepreneur is accused of manipulating the stock of SM Entertainment in an effort to thwart a takeover by Hybe, another leading K-pop agency.
Both SM Entertainment and Hybe are major players in the K-Pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim established Kakao in 2010 in Jeju City and held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was recognized as South Korea’s richest individual, with an estimated fortune exceeding $13 billion.
Following the news of his arrest, Kakao’s stock value dropped by 5% on Tuesday.
Woochan Kim, a professor at the Korea University Business School, commented that this situation could mark Kakao’s “biggest crisis,” emphasizing the need for remaining executives to demonstrate the company’s stability in Kim’s absence.