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 transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. An arrest warrant issued by the Seoul Southern District Court allowed for his detention, as prosecutors expressed 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, as reported. The company described the arrest as “unfortunate.”
At 58, Kim is accused of interfering with the stock of SM Entertainment during a takeover attempt last year to thwart rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe represent two of the biggest names in the K-pop industry, overseeing groups like Aespa and BTS.
Kakao eventually completed the acquisition of SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people, with Kim holding around a 24% stake. At one time, he was recognized as South Korea’s wealthiest individual, boasting an estimated net worth exceeding $13 billion.
Following the 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 represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate that the company can continue to thrive in Kim’s absence.