A South Korean billionaire and technology executive 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 tech giant Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant for his detention due to concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim reportedly stated in a company meeting last week. Kakao referred to his arrest as “unfortunate.”
Kim, aged 58, is accused of manipulating the stock of SM Entertainment during a takeover last year to thwart another major K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are among South Korea’s largest K-Pop companies, representing popular groups Aespa and BTS, respectively.
Kakao has ultimately secured the acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, faced indictment on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao has over a 24% stake owned by Kim, who had employed more than 10,000 people as of 2020. He previously held the title of South Korea’s richest person, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday. A business professor commented that this could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s resilience without its founder.