A South Korean billionaire and tech executive 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 technology firm Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court due to concerns from prosecutors that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has described the arrest as “unfortunate.”
The 58-year-old is accused of stock manipulation related to SM Entertainment during a takeover bid last year, aiming to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are among the largest K-Pop companies in South Korea, known for managing groups such as Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao is a significant player in the tech industry, with Kim holding around a 24% stake in the company and employing over 10,000 people in 2020. At one point, he was the richest person in South Korea, boasting an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, indicated that this may represent Kakao’s “biggest crisis.” He emphasized that it would be up to the remaining company leadership to demonstrate that Kakao can continue to operate effectively in Kim’s absence.