A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has approved an arrest warrant for his detention amid concerns that he might flee the country or destroy evidence.
Kim, 58, denied the allegations, stating in a recent staff meeting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
He is accused of engaging in stock manipulation involving SM Entertainment during a takeover bid last year, with the intention of thwarting rival K-pop company Hybe’s attempts to acquire it.
SM Entertainment and Hybe are two of the most prominent K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on related stock manipulation charges.
Kim founded Kakao, headquartered in Jeju City, in 2010 and retains approximately a 24% ownership stake in the company, which employed over 10,000 individuals as of 2020. He was once recognized as South Korea’s richest person, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a business professor at Korea University, indicated 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.”