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 takeover last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company referred to his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to thwart a rival K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are among South Korea’s largest K-Pop companies, representing popular groups Aespa and BTS, respectively.
Kakao ultimately took over SM Entertainment, and last year, the firm’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, with its headquarters located in Jeju City. He held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was South Korea’s wealthiest individual, boasting an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock dropped by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, commented that this could represent “Kakao’s biggest crisis.” He emphasized that it will be crucial for those remaining at the company to demonstrate its operational effectiveness in Kim’s absence.