A South Korean billionaire and technology executive was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant for him amid concerns from prosecutors that he may attempt to flee the country or destroy evidence.
Kim has denied the allegations, asserting during a staff meeting at Kakao last week that he has never authorized or supported any illegal activities. Kakao has described his arrest as “unfortunate.”
The 58-year-old is accused of stock manipulation involving SM Entertainment last year, in an effort to prevent rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two of the largest companies in South Korea’s K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, and he owns approximately 24% of the company’s shares, which employed more than 10,000 individuals as of 2020. Once recognized as South Korea’s richest individual, his net worth was estimated to exceed $13 billion.
Following the news of his arrest, Kakao’s stock experienced a decline of 5%.
Woochan Kim, a professor at Korea University Business School, expressed that this incident could represent “Kakao’s biggest crisis.” He added that it would be crucial for those remaining in the company to demonstrate its capability to function successfully without the founder’s presence.