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 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 granted an arrest warrant amid concerns from prosecutors that he might attempt to flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim denied the allegations, stating, “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 SM Entertainment’s stock during their acquisition last year in order to block rival K-pop agency Hybe from taking over the company. SM Entertainment and Hybe are major players in the K-pop industry, representing well-known groups Aespa and BTS, respectively.
Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao is a significant player in the tech industry, employing over 10,000 people as of 2020, with Kim owning about a 24% stake in the company. He was once recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped 5%. Woochan Kim, a professor at Korea University Business School, indicated that this incident could be Kakao’s “biggest crisis,” emphasizing the necessity for the remaining leadership to demonstrate the company’s capability to operate effectively without its founder.