A South Korean billionaire and technology executive 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 tech company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant out of concern that he might flee the country or destroy evidence.
In a recent meeting at Kakao, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao also expressed disappointment over the situation, calling the arrest “unfortunate.”
The 58-year-old is accused of tampering with the stock of SM Entertainment during a takeover attempt last year, allegedly as part of a strategy to disrupt Hybe, another major K-pop company, from purchasing it.
SM Entertainment and Hybe are among the largest K-pop firms in South Korea, representing popular acts such as Aespa and BTS.
Kakao eventually acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges.
Kim established the company in 2010, and as of 2020, it employed over 10,000 individuals, with Kim holding roughly a 24% ownership stake. At one time, he was recognized as South Korea’s wealthiest individual, boasting an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested that this could represent a significant crisis for Kakao. “It would be the responsibility of those who remain at the company to demonstrate that it can operate successfully even in the absence of the founder,” he noted.