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 technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court has issued an arrest warrant for his detention, amid concerns from prosecutors that he may attempt to flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim asserted in a staff meeting at Kakao last week. The company deemed the arrest “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover bid last year, allegedly to thwart a competing acquisition by another major K-pop agency, Hybe.
SM Entertainment and Hybe are two of South Korea’s leading K-pop firms, representing artists such as Aespa and BTS respectively. Kakao eventually succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a major player in the tech industry, with Kim holding approximately a 24% stake in the company. In 2020, the firm employed over 10,000 individuals. Kim was once recognized as South Korea’s wealthiest person, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock saw a decline of 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, commented that this situation might represent Kakao’s “biggest crisis.” He emphasized that it is now up to those remaining at the company to demonstrate its ability to function effectively in the absence of its founder.