A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been formally charged, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant for him, citing 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, while the company expressed that his arrest was “unfortunate.”
The 58-year-old is accused of engaging in stock manipulation involving SM Entertainment during a takeover bid last year, aiming to prevent another major K-pop agency, Hybe, from acquiring the company.
SM Entertainment and Hybe are two of South Korea’s largest K-pop agencies, representing popular groups Aespa and BTS, respectively.
Kakao ultimately completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is partly owned by Kim, who held approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing the importance for the remaining leadership to demonstrate that the company can operate effectively without its founder.