A South Korean billionaire and tech leader was arrested on Tuesday, facing allegations of manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant as prosecutors expressed concerns that he might flee the country or destroy evidence.
“I firmly deny the allegations. I have never instructed or endorsed any illegal activity,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
Kim, who is 58 years old, is accused of manipulating the stock of SM Entertainment amidst a takeover last year to thwart its acquisition by Hybe, another leading K-pop agency.
SM Entertainment and Hybe are among South Korea’s largest K-pop companies, associated with popular groups Aespa and BTS, respectively.
Ultimately, Kakao secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun also faced indictment on stock manipulation charges.
Kim founded Kakao in 2010, which is based in Jeju City. He held about a 24% share in the company, which employed over 10,000 people as of 2020. At one time, he was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, indicated that this could represent Kakao’s “biggest crisis.”
“It is now up to those who remain at the company to demonstrate that it can operate effectively in the absence of its founder,” he remarked.