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 deal 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 him out of concern that he might flee the country or destroy evidence.
Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a company meeting last week. Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment last year to thwart another K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually succeeded in acquiring SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was indicted on similar stock manipulation charges.
Kim founded Kakao in 2010, and it is based in Jeju City. He retained around a 24% stake in the company, which employed over 10,000 people in 2020. At one time, he was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday. A business professor noted that this could represent Kakao’s “biggest crisis,” emphasizing that the remaining leadership must demonstrate the company’s capability to operate effectively without its founder.