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 with any offenses. The Seoul Southern District Court approved an arrest warrant, citing concerns that he might flee the country or destroy evidence.
Kim asserted his innocence during a recent staff meeting at Kakao, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment as part of a scheme to block Hybe, another major K-pop agency, from acquiring it. Both SM Entertainment and Hybe are significant players in South Korea’s K-Pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, and he holds approximately a 24% stake in the company, which employed more than 10,000 people as of 2020. He was once ranked as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, noted that this incident could represent “Kakao’s biggest crisis,” emphasizing the need for the remaining leadership to demonstrate that the company can thrive in Kim’s absence.