A South Korean billionaire and tech 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 technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for his detention amid concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated in a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year in a bid to thwart rival agency Hybe from acquiring the company.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular acts Aespa and BTS, respectively.
Kakao ultimately completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer was also indicted on charges of stock manipulation.
Kim, who founded Kakao in 2010 and holds approximately a 24% stake, oversaw a company that employed over 10,000 individuals as of 2020. He was once regarded as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock dropped by 5%. A professor at Korea University Business School remarked that this situation could represent Kakao’s “biggest crisis.”
“It will be the responsibility of those who remain at the company to demonstrate that it can operate effectively even without the founder’s presence,” he commented.