A South Korean billionaire and tech executive 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. The Seoul Southern District Court issued an arrest warrant for his detention over 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, according to reports. The company described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover last year, aiming to obstruct another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-pop firms, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao has grown significantly, employing over 10,000 people in 2020, with Kim holding about a 24% stake in the company. At one point, he was considered South Korea’s richest person, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock price fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis.” He emphasized that it would be crucial for the remaining leadership to demonstrate that the company can thrive even in the founder’s absence.