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 the technology giant Kakao, has not been formally charged as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant for him, expressing concerns that he might flee the country or destroy evidence.
During a staff meeting at Kakao last week, Kim claimed, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described his arrest as “unfortunate.”
Kim, 58, is accused of manipulating SM Entertainment’s stock in connection with a takeover attempt last year, aiming to thwart rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe stand as two of the largest K-Pop companies in South Korea, managing successful acts such as Aespa and BTS.
Kakao eventually acquired SM Entertainment. Additionally, Kakao’s chief investment officer, Bae Jae-hyun, was indicted last year on similar stock manipulation allegations.
Founded in 2010 and based in Jeju City, Kakao is partly owned by Kim, who held about a 24% stake as of 2020, with the company employing over 10,000 individuals at that time. Kim was once regarded as South Korea’s richest individual, boasting an estimated net worth exceeding $13 billion.
In response to news of his arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, noted that this could represent Kakao’s “biggest crisis,” indicating that it will be essential for those remaining at the company to demonstrate that it can continue to function effectively in Kim’s absence.