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 the technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure he remains in custody amid concerns he might flee the country or destroy evidence.
Kim asserted that the allegations are false, stating, “I have never instructed or condoned any illegal acts,” during a meeting with Kakao staff last week. The company described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart Hybe, another major K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing famous groups such as Aespa and BTS.
Kakao ultimately 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 headquartered in Jeju City, Kakao employs over 10,000 people and Kim held approximately a 24% stake in the company as of 2020. At one time, he was considered South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price dropped by 5%. A professor at Korea University Business School expressed that this situation could represent Kakao’s “biggest crisis.” He noted that it will be crucial for those remaining at the company to demonstrate its ability to thrive even in the absence of its founder.