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 technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant over concerns that he might flee the country or destroy evidence.
Kim asserted his innocence, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” in a recent meeting at Kakao. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover bid last year, aiming to thwart the acquisition attempt by Hybe, another leading K-pop agency.
SM Entertainment and Hybe are among the largest players in the K-pop industry, representing popular groups such as Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao had over 10,000 employees in 2020, and Kim held a stake of around 24% in the company. At one point, he was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this might represent “Kakao’s biggest crisis.” He emphasized that it will be crucial for the remaining leadership to demonstrate the company’s capacity to function effectively in Kim’s absence.