A South Korean billionaire and technology executive 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 tech company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant, citing concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
Kim, 58, is accused of manipulating the stock of SM Entertainment amid a takeover attempt last year, allegedly to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-Pop companies, representing popular groups like Aespa and BTS.
Ultimately, Kakao completed its acquisition of SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, with its headquarters in Jeju City. He holds approximately a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one point, he was South Korea’s richest individual, boasting an estimated net worth exceeding $13 billion.
Following 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 be Kakao’s “biggest crisis.” He emphasized that it is now up to the remaining leaders at Kakao to demonstrate the company’s ability to operate effectively without its founder.