A South Korean billionaire and tech 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 technology firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court as prosecutors expressed concerns he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated at a recent staff meeting at Kakao. The company denounced the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover to thwart Hybe, another major K-pop agency, from acquiring it. SM Entertainment and Hybe represent two leading K-Pop acts in South Korea, Aespa and BTS, respectively.
Kakao eventually secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted for stock manipulation.
Kim established Kakao in 2010 and retains about a 24% stake in the company, which had more than 10,000 employees by 2020. At one point, he was considered South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could pose Kakao’s “biggest crisis,” emphasizing the need for remaining executives to demonstrate effective leadership in Kim’s absence.