A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly engaging in stock price manipulation related to 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 attempt to flee the country or destroy evidence.
Kim denied the accusations during a recent staff meeting at Kakao, 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 businessman is accused of manipulating shares of SM Entertainment as part of a strategy to thwart Hybe, another leading K-pop agency, from acquiring the company.
SM Entertainment and Hybe are two of South Korea’s largest K-pop firms, known for representing popular groups Aespa and BTS, respectively.
Kakao eventually purchased SM Entertainment, and last year, the company’s chief investment officer was also indicted on charges of stock manipulation.
Kim established Kakao in 2010, and he owned approximately 24% of the company, which employed over 10,000 individuals in 2020. He was once recognized as South Korea’s richest person, with a net worth exceeding $13 billion.
Following the news of his arrest, shares of Kakao fell by 5%. A professor at Korea University Business School remarked that this situation might represent Kakao’s “biggest crisis,” suggesting it’s now up to the remaining team to ensure the company’s effective operation in the founder’s absence.