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 the technology company Kakao, has not 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.
Kim denied the allegations, stating in a staff meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
Kim, 58, is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to hinder another major K-pop company, Hybe, from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop firms in South Korea, representing popular groups like Aespa and BTS. Ultimately, Kakao completed the acquisition of SM Entertainment, while Kakao’s chief investment officer, Bae Jae-hyun, was indicted last year on similar stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao has seen Kim maintain a roughly 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was considered South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing the importance of maintaining strong company operations in the absence of the founder.