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 transaction last year.
Kim Beom-su, the founder of the tech giant Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for his detention due to 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, with the company describing the arrest as “unfortunate.”
At 58 years old, Kim is accused of tampering with the stock of SM Entertainment during a takeover bid last year, part of a plan to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two leading K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is largely owned by Kim, who held a 24% stake in the company. In 2020, Kakao employed over 10,000 people. He was once considered South Korea’s richest individual, boasting a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock saw a decline of 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.”
“It will be up to those who remain at the company to demonstrate that it can operate effectively, even in the absence of its founder,” he stated.