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 technology company Kakao, has not yet been officially charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao expressed that the arrest is “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, intending to thwart a competing acquisition by another major K-pop agency, Hybe.
SM Entertainment and Hybe are two of the largest companies in the K-pop industry, representing popular groups such as Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Kim founded Kakao, based in Jeju City, in 2010. He holds approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s ability to operate effectively without its founder.