A South Korean billionaire and tech leader 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 technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure his custody, as prosecutors expressed concerns he might flee the country or tamper with evidence.
Kim has publicly denied the allegations, stating during a staff meeting 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 businessman is accused of engaging in stock manipulation involving SM Entertainment during a takeover attempt last year, allegedly to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing chart-topping groups Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on related stock manipulation charges.
Kim founded Kakao in 2010, and he holds approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was considered South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. A professor at Korea University Business School noted that this could represent Kakao’s most significant crisis, emphasizing that it is now the responsibility of those remaining in the company to demonstrate its ability to function effectively without the founder.