A South Korean billionaire and technology entrepreneur was arrested on Tuesday over allegations of stock price manipulation involving a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court has issued an arrest warrant for his detention, as prosecutors expressed concern that he might flee the country or destroy evidence.
Kim has denied the allegations, asserting in a company meeting that he has never directed or endorsed any illegal activities. Kakao described the arrest as “unfortunate.”
The 58-year-old businessman is accused of influencing the stock of SM Entertainment last year to obstruct Hybe, another leading K-pop agency, from purchasing it.
Both SM Entertainment and Hybe are significant players in the South Korean K-pop industry, known for managing popular groups Aespa and BTS, respectively.
Kakao ultimately took over SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges.
Kim founded Kakao in 2010, and as of 2020, the company, headquartered in Jeju City, employed over 10,000 people, with Kim holding approximately a 24% stake. At one point, he was South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. A professor at Korea University Business School remarked that this situation could represent Kakao’s “biggest crisis,” highlighting the importance for the company to demonstrate stability in Kim’s absence.