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 transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged according to reports. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim declared during a company meeting last week, “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 suspected of engaging in stock manipulation related to SM Entertainment during a takeover bid last year, as part of a strategy to thwart a rival acquisition attempt by Hybe, another leading K-pop agency.
SM Entertainment and Hybe represent two of South Korea’s largest K-pop entities, encompassing popular groups such as Aespa and BTS.
Kakao eventually completed the acquisition of SM Entertainment. Furthermore, last year, Bae Jae-hyun, the chief investment officer at Kakao, was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, with its headquarters in Jeju City. He holds approximately a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one point, he was recognized as the richest person in South Korea, with a net worth surpassing $13 billion.
Following the news of his arrest, Kakao’s stock price fell by 5% on Tuesday.
Woochan Kim, a business professor at Korea University, remarked that this could represent Kakao’s “biggest crisis.”
He noted, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”