A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a takeover 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.
“I have never instructed or condoned any illegal acts,” Kim stated in a recent staff meeting at Kakao. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment in an effort to thwart a takeover bid from Hybe, another major player in the K-pop industry. SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao was able to acquire SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao, in which Kim retains about a 24% stake, employed over 10,000 people in 2020. At one time, Kim was South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5%. Industry expert Woochan Kim from Korea University Business School remarked that this could be Kakao’s “biggest crisis,” emphasizing the importance for remaining leadership to demonstrate the company’s resilience in Kim’s absence.