A South Korean billionaire and tech entrepreneur 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 Kakao, has not yet been formally charged, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant to ensure his custody, citing concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated during a staff meeting at Kakao last week, with the company describing the arrest as “unfortunate.”
The 58-year-old is accused of tampering with the stock of SM Entertainment during a takeover last year in an effort to thwart another major K-pop agency, Hybe, from acquiring it.
Both SM Entertainment and Hybe are significant players in South Korea’s K-pop industry, representing popular groups Aespa and BTS, respectively. Kakao eventually acquired SM Entertainment, while last year Kakao’s chief investment officer Bae Jae-hyun faced similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a major technology firm in which Kim holds approximately a 24% stake. The company employed over 10,000 people in 2020, and at one point, Kim was the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing the necessity for the remaining leadership to demonstrate the company’s resilience in the founder’s absence.