A South Korean billionaire and tech entrepreneur 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 has issued an arrest warrant due to concerns that Kim might flee the country or destroy evidence related to the allegations.
Kim, 58, denied the accusations during a recent meeting, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment amid a takeover bid last year to thwart rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao succeeded in acquiring SM Entertainment. In a related case, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation last year.
Founded in 2010 and based in Jeju City, Kakao employed over 10,000 individuals by 2020. At one point, Kim was recognized as South Korea’s richest individual, with an estimated wealth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday. Experts, including Woochan Kim from Korea University Business School, suggested that this could be Kakao’s “biggest crisis,” indicating that it will be essential for remaining company leaders to demonstrate effective management in Kim’s absence.