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 firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court approved an arrest warrant due to concerns that he might flee the country or destroy evidence pertaining to the case.
Kim declared at a recent staff meeting that the accusations against him are false and that he has never endorsed or participated in any illegal activities. Kakao has described the arrest as “unfortunate.”
At 58 years old, Kim is alleged to have manipulated the stock of SM Entertainment in connection with a takeover last year, intending to thwart the acquisition efforts of Hybe, another major K-pop agency.
SM Entertainment and Hybe are key players in the K-pop industry, representing popular groups Aespa and BTS, respectively. Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a company in which Kim owns approximately a 24% stake. It employed more than 10,000 individuals in 2020. Kim was once the wealthiest person in South Korea, with an estimated net worth exceeding $13 billion.
In response to the arrest news, Kakao’s stock dropped by 5% on Tuesday. A professor from Korea University Business School remarked that this situation could represent Kakao’s most significant crisis, emphasizing that the remaining leadership must prove the company’s resilience without its founder.