A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a significant K-pop agency during a deal last year.
Kim Beom-su, who established the tech company Kakao, has yet to be formally charged. The Seoul Southern District Court issued an arrest warrant as prosecutors expressed concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a meeting with Kakao staff last week. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment last year during a takeover, allegedly to thwart Hybe, another prominent K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, managing popular groups such as Aespa and BTS, respectively.
Kakao ultimately acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for charges related to stock manipulation.
Kim founded Kakao in 2010, with headquarters in Jeju City. He held approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
On Tuesday, Kakao’s stock fell by 5% following the news of his arrest.
Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis,” adding that it would be the responsibility of those remaining in the company to demonstrate its capability to operate effectively without its founder.