A South Korean billionaire and tech entrepreneur was arrested on Tuesday on accusations of manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of technology company Kakao, has not been formally charged yet. The Seoul Southern District Court issued an arrest warrant, with prosecutors concerned that he might attempt to flee the country or destroy evidence.
Kim, 58, denied the allegations, stating in a staff meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
He faces accusations of manipulating the stock of SM Entertainment as part of a strategy to thwart Hybe, another major K-pop agency, from acquiring it. SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups such as Aespa and BTS.
Kakao went on to acquire SM Entertainment, and last year, Bae Jae-hyun, the chief investment officer of Kakao, was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, and he held about a 24% stake in the company, which employed over 10,000 individuals as of 2020. He was once the richest person in South Korea, with a net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining company leaders to demonstrate that the organization can thrive in the absence of its founder.