A South Korean billionaire and technology 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 company Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
Kim stated 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 influencing the stock of SM Entertainment during a takeover attempt to thwart another K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are among South Korea’s leading K-pop firms, with Aespa and BTS signed to their rosters, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment. Additionally, Kakao’s chief investment officer, Bae Jae-hyun, was indicted last year on similar charges of stock manipulation.
Kim founded Kakao in 2010, which is based in Jeju City and employed over 10,000 people by 2020. At one time, he was considered South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s capability to operate effectively in the absence of its founder.