A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency as part of a deal last year.
Kim Beom-su, the founder of technology firm Kakao, has not been officially charged, according to reports. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described his arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment during a takeover bid last year, aiming to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two leading K-pop firms in South Korea, with artists including Aespa and BTS under their umbrellas.
Kakao eventually acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, also faced indictment on stock manipulation charges.
Kim established Kakao in 2010, and he held approximately a 24% stake in the company, which had over 10,000 employees in 2020. At one time, he was the wealthiest person in South Korea, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.” He emphasized that it will be crucial for the remaining leadership to demonstrate the company can operate effectively in Kim’s absence.