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 deal last year.
Kim Beom-su, the founder of technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant amid concerns that he might flee the country or destroy evidence.
Kim asserted in a staff meeting at Kakao last week that the allegations against him are false, stating, “I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment amid a takeover bid last year, purportedly to thwart a rival acquisition by Hybe, another major K-pop agency.
SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively. Ultimately, Kakao acquired SM Entertainment. Additionally, last year, Kakao’s chief investment officer Bae Jae-hyun faced indictment on similar charges of stock manipulation.
Kim founded Kakao in 2010, with its headquarters based in Jeju City. He held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, commented that this situation might represent Kakao’s “biggest crisis,” emphasizing the importance for remaining management to demonstrate the company’s stability in the absence of its founder.