A South Korean billionaire and tech entrepreneur was arrested on Tuesday under allegations of stock price manipulation related to a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court issued an arrest warrant for him amid concerns that he could potentially flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a recent staff meeting at Kakao. The company described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment as part of a strategy to hinder rival K-pop agency 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 completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. He was once the richest individual in South Korea, with a net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this incident may represent Kakao’s “biggest crisis.”
“It will be up to those who remain at the company to demonstrate that it can operate effectively even in the absence of its founder,” he said.