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 company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court approved an arrest warrant amid concerns from prosecutors that he might attempt to flee the country or destroy evidence.
Kim denied the allegations during a staff meeting at Kakao last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of tampering with the stock of SM Entertainment in order to disrupt a takeover by Hybe, another leading K-pop agency. SM Entertainment and Hybe are among the largest K-pop firms in the nation, representing popular groups like Aespa and BTS.
Kakao eventually acquired SM Entertainment, and last year Bae Jae-hyun, the chief investment officer of Kakao, was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a major employer, with over 10,000 staff in 2020. At one time, Kim was considered South Korea’s wealthiest individual, holding an estimated net worth of over $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, commented that this situation could represent Kakao’s “biggest crisis,” emphasizing the importance for the remaining executives to demonstrate that the company can continue to operate effectively in Kim’s absence.