A South Korean billionaire and technology 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 technology company Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant out of concern that he might leave the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company expressed that the arrest was “unfortunate.”
Kim, 58, is accused of influencing the stock of SM Entertainment during a takeover last year in an effort to prevent competitor Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe represent popular K-pop groups Aespa and BTS, respectively.
Ultimately, Kakao managed to acquire SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges.
Founded by Kim in 2010, Kakao is headquartered in Jeju City and had over 10,000 employees in 2020. At one point, Kim was South Korea’s wealthiest individual, with an estimated net worth surpassing $13 billion.
Following the news of his arrest, Kakao’s stock price fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.” He emphasized that it will now be up to those remaining in the company to demonstrate that it can operate successfully even without its founder.