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 deal last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant for his detention, as prosecutors are concerned he might flee the country or destroy evidence.
Kim has publicly 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 called the arrest “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating shares of SM Entertainment during a takeover attempt last year to hinder Hybe, another significant K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s leading K-Pop companies, representing popular groups Aespa and BTS, respectively. Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer was also indicted on stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao is a major player in the tech industry. Kim holds approximately a 24% stake in the company, which employed over 10,000 people in 2020. He was formerly considered South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5% on Tuesday. An expert from Korea University Business School suggested that this could be Kakao’s “biggest crisis,” emphasizing that it would now be essential for others in the company to demonstrate that it can thrive without its founder.