A South Korean billionaire and tech entrepreneur was arrested on Tuesday for purportedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for Kim due to concerns that he could flee the country or destroy evidence related to the case.
In a recent meeting at Kakao, Kim denied the allegations, stating, “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 manipulating SM Entertainment’s stock in connection with a takeover bid last year, allegedly to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among South Korea’s leading K-Pop companies, representing popular acts such as Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5%. According to Woochan Kim, a professor at Korea University Business School, this situation could represent Kakao’s “biggest crisis.” He emphasized that it would now be up to the remaining leadership to demonstrate that the company can thrive without its founder.