A South Korean billionaire and technology executive 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 the technology firm Kakao, has not been formally charged according to reports. The Seoul Southern District Court issued an arrest warrant, citing concerns that he might flee the country or destroy evidence.
Kim has denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a company meeting last week. Kakao expressed that his arrest is “unfortunate.”
The 58-year-old is accused of tampering with the stock of SM Entertainment in a bid to derail Hybe, another leading K-pop company, from acquiring it. Both SM Entertainment and Hybe are major players in the K-pop industry, with SM representing groups like Aespa and Hybe linked to BTS.
Kakao eventually acquired SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges related to stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao is a significant player in the tech industry, with Kim holding about a 24% stake in the company, which had over 10,000 employees as of 2020. Kim was previously recognized as South Korea’s richest individual, with an estimated fortune exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5%. A professor at Korea University Business School remarked that this could be Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate that the company can operate effectively in Kim’s absence.