A South Korean billionaire and tech executive was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence.
Kim stated during a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment during a takeover bid last year, aiming to prevent rival agency Hybe from acquiring it. Both SM Entertainment and Hybe are leading forces in the K-Pop industry, representing popular groups Aespa and BTS, respectively.
Kakao ended up acquiring SM Entertainment, while last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao has around a 24% stake held by Kim and employed over 10,000 people as of 2020. At one point, he was recognized as South Korea’s richest individual, with his net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock price fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing the necessity for the remaining leadership to demonstrate the company’s capability to function independently of its founder.