A South Korean billionaire and tech executive has been arrested on suspicion of manipulating stock prices of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been officially charged, according to reports. The Seoul Southern District Court issued an arrest warrant over concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim maintained his innocence, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to hinder rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two leading K-Pop companies in South Korea, known for representing groups such as Aespa and BTS.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao has over 10,000 employees, and Kim held about a 24% stake in the company by 2020. At one time, he was regarded as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.” He emphasized that it would be crucial for those who remain in the company to demonstrate its ability to function effectively without its founder.