A South Korean billionaire and technology mogul was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant 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 stated in a meeting with employees at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of artificially inflating the stock of SM Entertainment during a takeover attempt last year to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-Pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar charges of stock manipulation.
Kim founded Kakao in 2010, and he holds roughly a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining team to demonstrate the company can thrive even in the founder’s absence.