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 tech company Kakao, has not been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant for Kim amid concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim maintained, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating SM Entertainment’s stock during a takeover last year, with the intention of obstructing rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe are two of South Korea’s largest K-pop firms, known for representing popular groups Aespa and BTS, respectively.
Kakao ultimately took over SM Entertainment. Notably, last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, with its headquarters located in Jeju City. He held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, Kim was the richest person in South Korea, boasting an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock value dropped by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, indicated that this could represent Kakao’s “biggest crisis,” and emphasized the importance of the remaining leadership in demonstrating the company’s ability to perform well in the absence of its founder.