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 deal last year.
Kim Beom-su, the founder of the technology company Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant for his detainment, as prosecutors expressed concerns he might attempt to flee the country or destroy evidence.
Kim denied the allegations, stating in a recent staff meeting at Kakao, “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 inflating the stock value of SM Entertainment during a takeover in an effort to thwart Hybe, another major K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups such as Aespa and BTS.
Kakao ultimately secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Kim founded the company, based in Jeju City, in 2010. He held approximately a 24% stake in Kakao, which employed over 10,000 individuals in 2020. At one time, he was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following 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 be Kakao’s “biggest crisis,” emphasizing that it will be essential for those remaining at the company to demonstrate its capability to operate successfully in Kim’s absence.