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 technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant due to concerns from prosecutors that he might flee the country or destroy evidence.
Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent staff meeting, according to reports. Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of engaging in stock manipulation involving SM Entertainment as part of an effort to thwart a takeover attempt by Hybe, another significant K-pop agency.
SM Entertainment and Hybe are two of South Korea’s major K-pop entities, with SM representing Aespa and Hybe managing BTS.
Ultimately, Kakao acquired SM Entertainment. Last year, Kakao’s chief investment officer was indicted for similar stock manipulation charges.
Kim founded Kakao in 2010, with the company headquartered in Jeju City. He held about a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. A professor from Korea University Business School remarked that this could represent Kakao’s “biggest crisis.”
He emphasized that the remaining members of the company must demonstrate that it can continue to function effectively even in the absence of its founder.