A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not been officially charged yet, according to the New York Times. The Seoul Southern District Court issued an arrest warrant to detain him, as prosecutors expressed concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
Kim, 58, is accused of distorting the stock of SM Entertainment during a takeover attempt last year, as part of a strategy to thwart Hybe, another prominent K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-pop firms, representing the groups Aespa and BTS, respectively.
Kakao eventually purchased SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also charged with stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is partly controlled by Kim, who held approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this situation could be Kakao’s “biggest crisis,” emphasizing that it would now be up to the remaining team members to demonstrate that the company can thrive even in the absence of its founder.