A South Korean billionaire and tech executive was arrested on Tuesday for allegedly manipulating the stock price of a significant K-pop agency during a deal last year.
Kim Beom-su, the founder of technology company Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
“I have never instructed or supported any illegal activities,” Kim stated in a staff meeting at Kakao the previous week. The company described the arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment during a takeover last year to thwart another major K-pop agency, Hybe, from acquiring it.
Both SM Entertainment and Hybe are prominent players in South Korea’s K-pop scene, representing notable groups such as Aespa and BTS. Kakao eventually went on to acquire SM Entertainment. Last year, Kakao’s chief investment officer was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, and he holds about a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was regarded as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5%.
A professor at Korea University Business School remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing that it is now up to the remaining leadership to demonstrate that the company can function effectively without its founder.