A prominent South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a deal that took place last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet been charged formally, according to reports. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he might attempt to flee the country or destroy evidence related to the case.
In a meeting with staff at Kakao last week, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of engaging in stock manipulation of SM Entertainment amid a takeover bid last year, allegedly to thwart rival K-pop agency Hybe from acquiring it.
Both SM Entertainment and Hybe are major players in the South Korean music industry, representing popular groups Aespa and BTS, respectively. Kakao eventually purchased SM Entertainment, and last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted for stock manipulation.
Kakao, which Kim founded in 2010 and holds approximately a 24% stake in, employed over 10,000 individuals as of 2020. At one point, Kim was the richest person in South Korea, with a net worth estimated at over $13 billion.
Following the news of his arrest, Kakao’s stock declined by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, indicated that this may represent Kakao’s “biggest crisis,” suggesting that it will be essential for remaining company leaders to demonstrate effective management in Kim’s absence.