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 deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been officially charged. An arrest warrant was issued by the Seoul Southern District Court amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim denied the allegations during a staff meeting at Kakao last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao referred to his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover last year to obstruct another major K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing artists such as Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on stock manipulation charges.
Kim founded Kakao, based in Jeju City, in 2010. He held approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one time, he was considered South Korea’s richest person, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.” He emphasized that it will be crucial for those remaining at the company to demonstrate its resilience in the absence of its founder.