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 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 for him as prosecutors expressed concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated in a company meeting last week. Kakao described the arrest as “unfortunate.”
Kim, 58, is accused of engaging in stock manipulation regarding SM Entertainment during a takeover attempt last year, allegedly to thwart rival agency Hybe from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups such as Aespa and BTS.
Eventually, Kakao did acquire SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people as of 2020. Kim was once the richest person in South Korea, boasting an estimated net worth of more than $13 billion.
Following the news of Kim’s arrest, Kakao’s stock price dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation might represent Kakao’s “biggest crisis,” emphasizing that it is crucial for the remaining company leadership to demonstrate that it can operate effectively in Kim’s absence.