A South Korean billionaire and tech entrepreneur has been arrested on suspicion of manipulating the stock prices of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of technology giant Kakao, has not yet faced formal charges. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he might flee the country or destroy evidence.
In response to the allegations, Kim stated during a recent meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described his arrest as “unfortunate.”
The 58-year-old is accused of distorting the stock of SM Entertainment while involved in a takeover, allegedly to thwart rival K-pop agency Hybe’s plans to acquire the company.
SM Entertainment and Hybe are among the largest K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually succeeded in acquiring SM Entertainment. Notably, last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on similar stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao was under Kim’s leadership, who held about a 24% stake in the company, which employed over 10,000 people in 2020. Once recognized as South Korea’s richest individual, Kim’s net worth was estimated to exceed $13 billion.
Following the news of his arrest, Kakao’s shares fell by 5% on Tuesday.
Korea University Business School professor Woochan Kim remarked that this could be Kakao’s “biggest crisis,” emphasizing the need for those remaining at the company to demonstrate effective leadership in Kim’s absence.