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 last year.
Kim Beom-su, the founder of technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for his detention, with prosecutors expressing concerns that he might flee the country or destroy evidence.
Kim stated in a staff meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the shares of SM Entertainment during a takeover attempt last year, as part of a strategy to block rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing popular groups Aespa and BTS, respectively. Ultimately, Kakao did acquire SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao saw Kim hold approximately a 24% stake and employ more than 10,000 people as of 2020. At one point, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.” He emphasized that it would be up to those remaining at the company to demonstrate that it can continue to operate effectively without its founder.