A South Korean billionaire and tech leader 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 technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant, with prosecutors concerned that he might attempt to flee the country or destroy evidence.
In a recent staff meeting at Kakao, 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 businessman is accused of influencing the stock of SM Entertainment during a takeover bid last year in an effort to thwart rival K-pop agency Hybe’s acquisition plans.
SM Entertainment and Hybe are two of the largest K-Pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately completed its acquisition of SM Entertainment. Additionally, last year, Kakao’s chief investment officer Bae Jae-hyun faced indictment on similar stock manipulation charges.
Kim founded Kakao, based in Jeju City, in 2010 and held approximately a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one time, he was the richest person in South Korea, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock plummeted by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing that it will be up to the remaining company leadership to demonstrate that operations can continue effectively without the founder’s presence.