A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a transaction 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 amid concerns from prosecutors that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts, and the allegations are not true,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover bid last year, allegedly aimed at blocking Hybe, another prominent K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s leading K-pop entities, representing notable groups like Aespa and BTS, respectively.
Kakao ultimately completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010 and held approximately 24% of the company’s shares. As of 2020, it employed over 10,000 individuals. At one point, he was South Korea’s richest person, with a 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, commented that this incident could represent Kakao’s “biggest crisis,” emphasizing the importance for remaining company leaders to demonstrate effective management without the founder.