A South Korean billionaire and technology pioneer 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 the tech giant Kakao, has not yet been formally charged. According to reports, the Seoul Southern District Court issued an arrest warrant over concerns that he might flee the country or tamper with evidence.
In a company staff meeting last week, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover bid last year as part of a strategy to block rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two of South Korea’s leading K-pop firms, representing popular groups Aespa and BTS, respectively. Ultimately, Kakao completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, the company is a major player in the tech industry, with Kim holding approximately a 24% stake. At one time, he was South Korea’s richest individual, boasting a net worth exceeding $13 billion.
The news of his arrest led to a 5% drop in Kakao’s stock price on Tuesday. Woochan Kim, a professor at Korea University Business School, commented that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for remaining executives to demonstrate that the company can operate effectively in Kim’s absence.