A South Korean billionaire and tech leader was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to a report. The Seoul Southern District Court issued an arrest warrant amid concerns from prosecutors that he might flee the country or destroy evidence.
During a staff meeting at Kakao last week, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
Kim, 58, is accused of engaging in stock manipulation related to SM Entertainment during a takeover last year, with the intent to thwart Hybe, another leading K-pop firm, from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao completed the acquisition of SM Entertainment. Last year, Bae Jae-hyun, the chief investment officer of Kakao, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a significant player in the tech industry, with Kim owning approximately 24% of the company. In 2020, it employed over 10,000 people, and at one time, Kim was regarded as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped 5%. A business professor remarked that this situation could represent “Kakao’s biggest crisis,” emphasizing the importance for those remaining in the company to demonstrate its ability to function effectively without its founder.