A prominent billionaire and technology entrepreneur from South Korea was arrested on Tuesday over allegations of stock price manipulation concerning a major K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech giant Kakao, has not yet been formally charged. The Seoul Southern District Court has issued an arrest warrant for him, as prosecutors are concerned he might flee the country or destroy evidence related to the case.
Kim denied the accusations, stating during a meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company referred to his arrest as “unfortunate.”
The allegations suggest that Kim manipulated the stock of SM Entertainment while attempting to prevent Hybe, another significant K-pop agency, from taking over the company.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop companies, representing popular acts such as Aespa and BTS.
Kakao ultimately acquired SM Entertainment, and last year, the chief investment officer of Kakao, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao saw Kim holding about a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s ability to operate effectively without its founder.