A South Korean billionaire and tech entrepreneur was apprehended on 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 technology company Kakao, has not yet been formally charged. According to reports, the Seoul Southern District Court issued an arrest warrant amid concerns that he might flee the country or attempt to destroy evidence.
In response to the allegations, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts” during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old is accused of distorting the stock of SM Entertainment during a takeover attempt last year, allegedly to block another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop firms in South Korea, with notable artists such as Aespa and BTS under their representation.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Kim established Kakao in 2010 in Jeju City and held approximately a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested that this could be “Kakao’s biggest crisis.” He emphasized that it would be up to those remaining at the company to demonstrate that it could continue to operate successfully without its founder.