A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant amid concerns from prosecutors that he might attempt to flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts; the allegations are not true,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old businessman faces accusations of manipulating the stock of SM Entertainment during a takeover last year, allegedly as part of a plot to hinder Hybe, another prominent K-pop agency, from acquiring it.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively. Kakao ultimately secured the acquisition of SM Entertainment. Previously, Kakao’s chief investment officer Bae Jae-hyun was indicted on similar stock manipulation charges.
Kim founded Kakao in 2010, which is based in Jeju City. He held approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was the richest person in South Korea, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. An expert from Korea University Business School noted that this could be Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to assure smooth operations in Kim’s absence.