A South Korean billionaire and technology entrepreneur 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 officially charged, as reported by the New York Times. The Seoul Southern District Court has issued an arrest warrant, expressing concerns that he might flee the country or destroy evidence.
“I deny these allegations. I have never instructed or permitted any illegal activities,” Kim stated during a company meeting at Kakao last week. The company referred to his arrest as “unfortunate.”
At 58 years old, Kim is accused of influencing the stock of SM Entertainment during a takeover attempt last year to thwart a bid by Hybe, another leading K-pop agency.
SM Entertainment and Hybe are among the largest K-Pop companies in South Korea, representing popular groups such as Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Kim established Kakao in 2010 and maintains approximately a 24% ownership stake in the company, which employed over 10,000 people in 2020. He was once recognized as the richest individual in South Korea, with an estimated net worth surpassing $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this situation could represent Kakao’s “biggest crisis,” emphasizing that it will be the responsibility of the remaining company leadership to demonstrate the firm’s capability to operate effectively in Kim’s absence.