A billionaire and tech leader from South Korea 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 yet been formally charged, according to the New York Times. An arrest warrant was issued by the Seoul Southern District Court to ensure his presence, as prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim stated in a Kakao staff meeting last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
At 58 years old, Kim is accused of engaging in stock manipulation involving SM Entertainment during a takeover attempt last year. This was reportedly part of a plot to prevent rival K-pop agency Hybe from acquiring the company.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing groups such as Aespa and BTS, respectively. Ultimately, Kakao was able to acquire SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, faced similar stock manipulation charges.
Kim founded Kakao, which is based in Jeju City, in 2010. As of 2020, the company employed over 10,000 people and Kim retained around a 24% stake in it. At one point, he was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.” He added, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”