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 the technology company Kakao, has not been formally charged yet, according to reports. The Seoul Southern District Court issued an arrest warrant for him amid concerns from prosecutors that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim denied the allegations, asserting, “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 last year in an effort to prevent rival K-pop agency Hybe from acquiring it. Both SM Entertainment and Hybe are leading K-pop companies in South Korea, promoting artists such as Aespa and BTS, respectively.
Kakao ultimately purchased SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Kim founded Kakao in 2010, and the company, based in Jeju City, employed over 10,000 staff in 2020. At one time, he was South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, indicated that this incident could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s capability to operate successfully without its founder.