A South Korean billionaire and technology executive 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 tech company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant to ensure he is taken into custody, as prosecutors are concerned he may flee the country or destroy evidence.
Kim denied the allegations, stating during a meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao called the arrest “unfortunate.”
The 58-year-old is accused of artificially inflating the stock of SM Entertainment to thwart a takeover by Hybe, another significant player in the K-pop industry. SM Entertainment and Hybe are major competitors in South Korea’s K-pop scene, with artists such as Aespa and BTS under their respective management.
Kakao successfully acquired SM Entertainment last year. Additionally, Kakao’s chief investment officer, Bae Jae-hyun, was indicted for stock manipulation charges in the past year.
Founded in 2010 and headquartered in Jeju City, Kakao is a major player in the tech industry, with Kim holding approximately a 24% stake in the company. Kakao employed over 10,000 individuals in 2020 and at one point, Kim was considered South Korea’s richest person, boasting 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, remarked that this could represent Kakao’s “biggest crisis.” He noted, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”