A South Korean billionaire and technology entrepreneur was arrested Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech company Kakao, has not been formally charged yet, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure his custody amid concerns that he might flee the country or destroy evidence.
Kim denied the allegations during a company meeting, asserting, “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 during a takeover attempt last year in an effort to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among the largest K-pop firms in South Korea, representing popular groups Aespa and BTS respectively.
Kakao ultimately acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a major player in South Korea’s tech industry, with Kim holding around a 24% stake. The company had over 10,000 employees in 2020, and at one point, Kim was the wealthiest person in South Korea, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price fell by 5%. Woochan Kim, a professor at Korea University Business School, noted that this could represent Kakao’s significant crisis, stating that remaining executives must demonstrate the company’s ability to function effectively in Kim’s absence.