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 that took place last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him amid concerns that he might attempt to flee the country or destroy evidence related to the case.
In a company meeting last week, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Following the news of his arrest, Kakao described the situation as “unfortunate.”
The 58-year-old businessman is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to prevent rival company Hybe from acquiring it. SM Entertainment and Hybe are among the largest K-Pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao, which is based in Jeju City, in 2010. He held approximately a 24% stake in the company, which employed more than 10,000 people in 2020. At one time, Kim was considered South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock value dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for those remaining at the company to ensure it operates effectively in the absence of its founder.