A South Korean billionaire and tech leader 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 officially charged, according to reports. The Seoul Southern District Court authorized an arrest warrant for him due to concerns that he might attempt to flee the country or destroy evidence.
Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a staff meeting at Kakao last week. The company expressed its dismay over the arrest, calling it “unfortunate.”
At 58, Kim faces accusations of manipulating stocks of SM Entertainment amid a takeover last year, aiming to obstruct Hybe, another major K-pop entertainment agency, from acquiring it. Both SM Entertainment and Hybe areleading K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately completed the acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Kim founded Kakao, headquartered in Jeju City, in 2010. He owns approximately 24% of the company, which employed over 10,000 people as of 2020. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock price dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this may represent Kakao’s “biggest crisis.” He emphasized that it will be up to those remaining at the company to prove that it can operate successfully even in the absence of its founder.