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 deal last year.
Kim Beom-su, the founder of technology firm Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors feared he might attempt to flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described his arrest as “unfortunate.”
Kim, 58, is accused of manipulating the stock of SM Entertainment during a takeover to thwart another major K-pop agency, Hybe, from purchasing it. SM Entertainment and Hybe represent two of South Korea’s largest K-pop companies, with Aespa and BTS under their respective banners.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people as of 2020, with Kim owning approximately 24% of the company’s shares. At one point, he was regarded as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock price fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could pose Kakao’s “biggest crisis,” emphasizing that it would be the responsibility of remaining executives to demonstrate the company’s capability to operate effectively without its founder.