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 formally charged, according to the New York Times. The Seoul Southern District Court issued an arrest warrant to ensure his presence, with prosecutors concerned he might flee the country or destroy evidence.
Kim asserted his innocence during a staff meeting at Kakao last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment amid a takeover attempt last year, aiming to thwart rival Hybe, another major K-pop agency, from acquiring it. SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Eventually, Kakao secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Founded by Kim in 2010 and headquartered in Jeju City, Kakao employed over 10,000 people as of 2020. At one time, Kim was considered South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis,” emphasizing the need for the remaining team to demonstrate the company’s resilience without its founder.