A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock prices of a prominent K-pop agency during a deal last year.
Kim Beom-su, founder of the technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him, citing 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 in a staff meeting at Kakao last week. The company described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart rival K-pop agency Hybe from acquiring the company. SM Entertainment and Hybe are among the largest K-Pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a major player in South Korea’s tech landscape, with Kim holding around a 24% stake. The company employed over 10,000 people in 2020 and at one time, Kim was South Korea’s richest individual, with an estimated 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 represent Kakao’s “biggest crisis.” He emphasized the need for the remaining leadership to demonstrate the company’s ability to function effectively without its founder.