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 that took place last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet faced formal charges. The Seoul Southern District Court issued an arrest warrant for him due to concerns that he might flee the country or destroy evidence.
“The allegations are untrue. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company expressed its disappointment over the arrest, calling it “unfortunate.”
Kim, 58, is accused of manipulating the stock of SM Entertainment during a takeover bid last year to thwart another major K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are two of the leading K-Pop entities in South Korea, associated with popular groups Aespa and BTS, respectively.
Ultimately, Kakao succeeded in acquiring SM Entertainment. 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 more than 10,000 people, with Kim owning approximately a 24% stake in the company. At one point, he was the wealthiest person in South Korea, with an estimated 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 situation could represent Kakao’s “biggest crisis.” He emphasized that it is now up to the remaining company leadership to demonstrate that it can continue to operate effectively in Kim’s absence.