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 tech firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence.
Kim denied the allegations, stating in a staff 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.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop companies, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded in 2010 and based in Jeju City, Kakao saw Kim owning approximately 24% of the company, which employed over 10,000 people in 2020. He was once recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, commented that this could represent Kakao’s “biggest crisis.” He emphasized that it would be up to the remaining team at the company to demonstrate effective operations in the absence of its founder.