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 transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. A Seoul Southern District Court authorized his arrest amid concerns from prosecutors that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, describing the situation as “unfortunate.”
The 58-year-old is accused of stock manipulation involving SM Entertainment during a takeover last year, intending to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop companies, representing popular groups Aespa and BTS, respectively. Ultimately, Kakao acquired SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was indicted on similar stock manipulation charges.
Kim founded Kakao, headquartered in Jeju City, in 2010 and retains about a 24% ownership stake in the firm, which employed over 10,000 people in 2020. He was once considered the richest person in South Korea, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could potentially be Kakao’s “biggest crisis,” emphasizing the need for remaining company leadership to demonstrate effective management in Kim’s absence.