A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during an acquisition deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might 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.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment amid a takeover attempt in a bid to thwart rival K-pop agency Hybe from acquiring the company.
SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular acts such as Aespa and BTS.
Eventually, Kakao successfully acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Kim founded Kakao in 2010, which has its headquarters in Jeju City. He holds approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was recognized as South Korea’s wealthiest individual with an estimated net worth surpassing $13 billion.
Following news of Kim’s arrest, Kakao’s stock saw a decline of 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.” He added, “It would be the responsibility of those who remain at the company to demonstrate that it can operate effectively even in the absence of its founder.”