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 deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court approved a warrant for his arrest amid concerns from prosecutors that he may flee the country or destroy evidence.
Kim denied the allegations during a recent staff meeting at Kakao, stating, “I have never instructed or condoned any illegal acts.” The company expressed disappointment over the arrest, labeling it “unfortunate.”
The 58-year-old is suspected of manipulating the stock of SM Entertainment in an effort to thwart a takeover attempt by Hybe, another major player in the K-pop industry. SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, while last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted for stock manipulation as well.
Founded in 2010 and headquartered in Jeju City, Kakao employs over 10,000 people and Kim holds a significant stake of approximately 24% in the company. At one time, he was South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, commented that this may represent Kakao’s “biggest crisis.” He emphasized that it is now up to the remaining leadership to demonstrate the company’s capacity to succeed in the absence of its founder.