A billionaire South Korean entrepreneur and tech leader was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal 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 for Kim amid concerns from prosecutors that he might evade law enforcement or destroy evidence.
In a staff meeting at Kakao last week, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company characterized the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover bid last year, allegedly to thwart rival K-pop agency Hybe from acquiring the company. SM Entertainment and Hybe represent two of South Korea’s largest K-Pop brands, Aespa and BTS, respectively.
Kakao has since acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim established Kakao, which is headquartered in Jeju City, in 2010. He retained a 24% stake in the firm, which employed over 10,000 individuals as of 2020. At one point, Kim was regarded as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock price 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 is essential for the remaining leadership to demonstrate that the company can continue to operate effectively in Kim’s absence.