A billionaire and tech entrepreneur from South Korea 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 yet to face formal charges, according to reports. An arrest warrant was issued by the Seoul Southern District Court amid concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, describing the allegations as untrue. The company responded by calling the arrest “unfortunate.”
The 58-year-old is accused of engaging in stock manipulation involving SM Entertainment during a takeover bid last year, allegedly aimed at obstructing Hybe, another leading K-pop agency, from acquiring the company.
SM Entertainment and Hybe are two of the largest players in the K-pop industry, representing the popular groups Aespa and BTS, respectively. Kakao ultimately completed its acquisition of SM Entertainment, and last year, the firm’s chief investment officer, Bae Jae-hyun, was also indicted on related stock manipulation charges.
Founded in 2010 in Jeju City, Kakao, where Kim holds approximately a 24% stake, employed over 10,000 people as of 2020. At one point, Kim was the richest person in South Korea, with a 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, commented that this situation could represent Kakao’s “biggest crisis,” emphasizing that it will be crucial for the remaining leadership at the company to demonstrate effective management in Kim’s absence.