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 company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him amid concerns from prosecutors that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a meeting at Kakao last week. The company expressed its disappointment regarding the arrest, labeling it “unfortunate.”
Kim, 58, is accused of manipulating the stock of SM Entertainment in 2022 during a takeover attempt designed to stop another major K-pop agency, Hybe, 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 eventually completed the acquisition of SM Entertainment. In a related incident, last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded in 2010 and based in Jeju City, Kakao, which Kim holds approximately a 24% stake in, employed over 10,000 individuals as of 2020. At one time, Kim was recognized as South Korea’s richest person, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested that this might be Kakao’s “biggest crisis.” He added that it would be essential for those who remain at the company to demonstrate its ability to function effectively in the founder’s absence.