A South Korean billionaire and technology pioneer 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 firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to place him in custody due to concerns that he might flee the country or destroy evidence.
Kim, 58, denied the allegations, stating in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao expressed that the arrest was “unfortunate.”
He is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to thwart another major K-pop agency, Hybe, from acquiring it.
Both SM Entertainment and Hybe are among the largest K-Pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Kim founded Kakao, based in Jeju City, in 2010. He reportedly holds about a 24% stake in the company and had over 10,000 employees in 2020. At one point, he was 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, noted that this could represent Kakao’s “biggest crisis.” He emphasized that it would be up to the remaining executives to demonstrate the company can operate effectively without its founder.