A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, founder of the tech company Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court, with prosecutors expressing concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, aimed at thwarting another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among South Korea’s leading K-Pop firms, representing popular acts such as Aespa and BTS, respectively.
Ultimately, Kakao acquired SM Entertainment. Additionally, last year, Kakao’s chief investment officer Bae Jae-hyun faced indictments over stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao is partially owned by Kim, who held about a 24% stake in the company, which employed over 10,000 people in 2020. Kim was once recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing the need for the remaining employees to demonstrate the company can operate effectively without its founder.