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 Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him amid concerns from prosecutors that he might attempt to flee the country or destroy evidence related to the investigation.
Kim, during a recent staff meeting at Kakao, denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment as part of a strategy to block Hybe, another major K-pop agency, from acquiring it. SM Entertainment and Hybe are among the largest K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually took over SM Entertainment. Additionally, last year, the company’s chief investment officer, Bae Jae-hyun, was indicted on stock manipulation charges.
Kim founded Kakao in 2010, which is based in Jeju City and employed over 10,000 staff members in 2020. At one time, he was considered South Korea’s richest individual, with a net worth surpassing $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis.” He noted that it would be crucial for the remaining executives at the company to demonstrate its ability to operate effectively without its founder.