A South Korean billionaire and tech 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 the technology firm Kakao, has not yet been officially charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court due to concerns from prosecutors that he might flee the country or destroy evidence.
Kim expressed his innocence during a staff meeting at Kakao last week, stating, “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 influencing the stock of SM Entertainment during a takeover last year in an attempt to thwart another major K-pop agency, Hybe, from acquiring the company.
SM Entertainment and Hybe are among South Korea’s largest K-pop firms, representing notable acts such as Aespa and BTS.
Ultimately, Kakao completed the acquisition of SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar charges related to stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao saw Kim maintain roughly a 24% stake in the company, which employed over 10,000 individuals in 2020. At one time, Kim was the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock experienced a 5% decline on Tuesday.
Woochan Kim, a professor at Korea University Business School, mentioned that this situation could represent Kakao’s “biggest crisis.” He added, “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.”