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 deal conducted last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant amid concerns that he might flee the country or destroy evidence.
Kim has publicly denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent staff meeting at Kakao. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating shares of SM Entertainment during a takeover attempt last year to thwart another major K-pop agency, Hybe, from acquiring it.
Both SM Entertainment and Hybe are leading K-pop companies in South Korea, known for representing popular groups such as Aespa and BTS, respectively.
Kakao eventually went on to acquire SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, faced similar stock manipulation charges.
Kim established Kakao, which is headquartered in Jeju City, in 2010. He holds approximately a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one point, he was deemed South Korea’s richest person, with a net worth exceeding $13 billion.
Following the news of his 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 critical for the remaining executives to demonstrate effective management in the absence of the founder.