A billionaire and tech leader from South Korea 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 firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he might flee the country or destroy evidence.
In a meeting with staff at Kakao last week, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to thwart rival K-pop agency Hybe from acquiring the company.
SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing notable groups Aespa and BTS, respectively. Kakao eventually took over SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun faced similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a major player in the tech industry, with Kim holding about a 24% stake in the company. It had over 10,000 employees as of 2020. At one point, Kim was South Korea’s richest individual, boasting 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, remarked that this incident could represent Kakao’s “biggest crisis,” indicating that it will be crucial for the remaining leadership to prove the company’s ability to operate effectively without its founder.