A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a previous acquisition attempt.
Kim Beom-su, the founder of the tech firm Kakao, has not yet been formally charged. A Seoul court issued an arrest warrant to ensure his presence, with prosecutors expressing concerns that he might flee the country or destroy evidence.
“The allegations are unfounded. I have never authorized or participated in any illegal activities,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
At 58, Kim faces accusations of stock manipulation involving SM Entertainment amid a takeover bid last year, which was intended to thwart rival agency Hybe from acquiring the company.
SM Entertainment and Hybe are two key players in South Korea’s K-pop industry, representing popular groups Aespa and BTS, respectively. Kakao eventually secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Kim founded Kakao, which is based in Jeju City, in 2010 and held a 24% stake in the company, which employed over 10,000 people in 2020. He was once considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a business professor at Korea University, remarked that this could be Kakao’s “biggest crisis,” adding, “It will be up to the remaining team at the company to prove it can function effectively without its founder.”