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 transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure his custody, as prosecutors expressed concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating SM Entertainment’s stock to hinder Hybe, another significant K-pop agency, from acquiring it during a takeover bid last year.
SM Entertainment and Hybe are among the largest K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Eventually, Kakao succeeded in acquiring SM Entertainment. Additionally, last year, Bae Jae-hyun, Kakao’s chief investment officer, was indicted on similar stock manipulation charges.
Kim founded Kakao in 2010, which is based in Jeju City. He reportedly holds around a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one time, he was South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this incident might represent Kakao’s “biggest crisis,” noting that it will be crucial for the remaining team to demonstrate the company’s ability to operate effectively without its founder.