A South Korean billionaire and technology entrepreneur 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 tech company Kakao, has not yet been formally charged. A Seoul Southern District Court issued an arrest warrant for his detention, as prosecutors expressed concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating stock prices of SM Entertainment during a takeover attempt last year, allegedly attempting to impede rival agency Hybe from acquiring it. SM Entertainment and Hybe are two of South Korea’s largest K-Pop agencies, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted over stock manipulation allegations.
Founded in 2010 and headquartered in Jeju City, Kakao is a major player in the tech industry, with Kim owning approximately 24% of the company. At one point, he was the richest person in South Korea, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock saw a decline of 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing that it will be crucial for the remaining leadership to demonstrate that the company can operate effectively in Kim’s absence.