A South Korean billionaire and technology 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 Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to bring him into custody, as prosecutors expressed concerns he might flee the country or destroy evidence.
“I firmly deny the allegations. I have never authorized or condoned any illegal activities,” Kim stated during a staff meeting at Kakao last week. The company referred to the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment in order to obstruct Hybe, another major K-pop agency, from acquiring the company. SM Entertainment and Hybe are two of the largest K-pop firms in South Korea, representing popular groups like Aespa and BTS.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao has a workforce of over 10,000 as of 2020. Kim has held about a 24% stake in the company and was once South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday. A professor from Korea University Business School suggested that this might be Kakao’s most significant crisis. “It will be up to those who remain to demonstrate that the company can continue to operate effectively even in the absence of its founder,” he remarked.