A South Korean billionaire and tech executive 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 technology giant Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant for him based on 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 in a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old businessman is accused of influencing the stock of SM Entertainment during a takeover attempt to thwart another major K-pop agency, Hybe, from acquiring the company.
SM Entertainment and Hybe represent two of South Korea’s top K-pop groups, Aespa and BTS, respectively. Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Kim founded Kakao in 2010, and he held a significant 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 an estimated fortune 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 represent Kakao’s “biggest crisis.” He emphasized that the remaining leadership must demonstrate the company’s ability to operate effectively in the absence of its founder.