A billionaire and tech entrepreneur from South Korea 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. The Seoul Southern District Court issued an arrest warrant to ensure he remains in custody, as prosecutors are concerned he may flee the country or attempt to destroy evidence.
In a recent meeting with staff at Kakao, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
Kim, 58, is accused of manipulating the stock of SM Entertainment amid a takeover bid last year, purportedly as part of a scheme to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two of the leading K-pop companies in South Korea, managing popular groups such as Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a major employer with over 10,000 staff as of 2020. Kim once held the title of South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, suggested this could be Kakao’s “biggest crisis,” emphasizing that it will now be up to those remaining at the company to demonstrate that it can function effectively without its founder.