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 Kakao, has not yet been formally charged. The Seoul Southern District Court approved an arrest warrant for him, citing concerns that he might flee the country or destroy evidence related to the case.
Kim has denied the allegations, stating in a staff meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of attempting to manipulate the stock of SM Entertainment during a takeover last year in order to hinder a rival K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are leading companies in the K-Pop industry, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted for stock manipulation.
Founded in 2010 and based in Jeju City, Kakao employed over 10,000 staff by 2020. At one point, Kim was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, commented that this might represent Kakao’s “biggest crisis,” emphasizing that it will now be up to the remaining leadership to demonstrate the company’s viability without its founder.