A billionaire tech entrepreneur from South Korea was arrested on Tuesday for allegedly 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 officially charged, as reported by the New York Times. The Seoul Southern District Court granted an arrest warrant amid concerns that he might flee the country or destroy evidence.
Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent staff meeting at Kakao. The company expressed that the arrest is “unfortunate.”
The 58-year-old businessman stands accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-pop firms, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao concluded the acquisition of SM Entertainment. Additionally, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted last year on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a large company, with Kim owning approximately 24% of its shares. In 2020, it employed over 10,000 people, and at one point, Kim was considered South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao stocks fell by 5%. Woochan Kim, a professor at Korea University Business School, indicated that this could be the company’s “biggest crisis.” He noted that it would be crucial for the remaining team to demonstrate effective management in Kim’s absence.