A South Korean billionaire and tech entrepreneur 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 the technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
Kim, 58, has denied the allegations, stating in a meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to hinder Hybe, another major K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s leading K-Pop companies, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010 and owns approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was considered South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday. 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 effective management in Kim’s absence.