A billionaire and tech entrepreneur from South Korea was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction that took place last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet faced formal charges according to reports. The Seoul Southern District Court issued an arrest warrant to ensure his custody, as prosecutors expressed concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim denied the allegations, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover bid to thwart Hybe, another leading K-pop agency, from purchasing it.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop firms, representing artists such as Aespa and BTS, respectively. Kakao eventually acquired SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun faced indictment on similar stock manipulation charges.
Kim founded Kakao in 2010, and the company, which he still holds about a 24% stake in, had more than 10,000 employees in 2020. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped 5%. Woochan Kim, a professor at Korea University Business School, commented that this could represent Kakao’s “biggest crisis,” emphasizing that it will be the responsibility of the remaining staff to demonstrate the company’s capability to operate effectively in Kim’s absence.