A billionaire and technology mogul from South Korea 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 Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant amid concerns 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. The company described the arrest as “unfortunate.”
At 58 years old, Kim faces accusations of manipulating the stock of SM Entertainment as part of a scheme to thwart rival K-pop agency Hybe from acquiring the company. SM Entertainment and Hybe are among the largest K-pop entities in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, while last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Kim launched the company in 2010, which is based in Jeju City, and he reportedly held around a 24% stake. Kakao had over 10,000 employees as of 2020. At one point, Kim was recognized as South Korea’s richest person, with an estimated net worth exceeding $13 billion.
On the day of his arrest, Kakao’s stock fell by 5%.
Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis.” He added that it will be up to the remaining team members to demonstrate the company’s ability to operate smoothly in Kim’s absence.