A South Korean billionaire and tech 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 technology firm Kakao, has not yet been formally charged, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant for him, citing concerns that he might flee the country or destroy evidence.
Kim denied the allegations, stating in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to block Hybe, another significant K-pop company, from acquiring it.
Both SM Entertainment and Hybe are among South Korea’s largest K-pop firms, representing artists such as Aespa and BTS. Kakao ultimately acquired SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun faced similar charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is predominantly owned by Kim, who held approximately a 24% stake in the company. As of 2020, Kakao employed over 10,000 individuals, and at one point, Kim was recognized as South Korea’s wealthiest person, with a net worth surpassing $13 billion.
In response to the news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, commented that this incident may represent Kakao’s “biggest crisis” and emphasized that it will be crucial for the remaining leaders within the organization to demonstrate that the company can operate effectively without its founder.