A South Korean billionaire and tech leader 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 the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant for him due to concerns that he might flee the country or destroy evidence, according to reports.
Kim, 58, has denied the allegations, stating during a meeting with Kakao staff last week that he has never authorized or condoned any illegal actions. Kakao described the arrest as “unfortunate.”
He is accused of artificially inflating the stock values of SM Entertainment amidst a takeover attempt, in part to thwart competition from Hybe, another major agency in the K-pop industry.
Both SM Entertainment and Hybe are major players in the South Korean music scene, representing popular groups like Aespa and BTS, respectively. Kakao eventually took over SM Entertainment. Additionally, Kakao’s chief investment officer Bae Jae-hyun was indicted on similar stock manipulation charges last year.
Kim founded Kakao in 2010 and maintains a roughly 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was recognized as the richest person in South Korea, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. A professor at Korea University Business School remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s ability to thrive in Kim’s absence.