A South Korean billionaire and tech executive 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 firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for his detention due to concerns that he might flee the country or destroy evidence.
Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The accusations against Kim, aged 58, revolve around claims of stock manipulation involving SM Entertainment while attempting to prevent rival K-pop agency Hybe from acquiring it. Both SM Entertainment and Hybe are among the largest K-pop firms in South Korea, representing groups such as Aespa and BTS, respectively.
Kakao eventually succeeded in acquiring SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on related stock manipulation charges.
Kim founded Kakao in 2010, which is based in Jeju City. He held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was considered the richest person in South Korea, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock experienced a 5% drop on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis.” He suggested that it would be essential for the remaining leadership at the company to demonstrate that it could operate effectively without its founder.