A South Korean billionaire and technology entrepreneur was arrested on Tuesday over allegations of stock price manipulation concerning a major K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
Kim asserted his innocence during a staff meeting at Kakao last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao labeled the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover last year to thwart another prominent K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two leading K-Pop companies in South Korea, representing popular groups Aespa and BTS, respectively. Ultimately, Kakao acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people and Kim holds approximately a 24% stake in the company. He was once 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% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.” He emphasized that it will be up to those remaining at the company to demonstrate that it can continue to operate effectively in the absence of its founder.