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 firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court over 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 during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old is accused of engaging in stock manipulation concerning SM Entertainment during a takeover attempt last year, which aimed to thwart another major K-pop company, Hybe, from acquiring it.
SM Entertainment and Hybe are two of the largest K-Pop enterprises in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges.
Kim founded Kakao in Jeju City in 2010 and held approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one time, he was the richest person in South Korea, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” adding that it will be crucial for the remaining executives to demonstrate that the company can operate effectively without its founder.