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 tech firm Kakao, has not been formally charged yet. A Seoul Southern District Court issued an arrest warrant for him due to concerns from prosecutors that he might flee the country or destroy evidence.
“I firmly deny the allegations. I have never instructed or condoned any illegal activities,” Kim stated during a staff meeting at Kakao last week, as reported. The company described the arrest as “unfortunate.”
The 58-year-old is accused of artificially inflating the stock of SM Entertainment during a takeover bid last year, intending to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are leading players in the South Korean K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a major player with Kim holding approximately a 24% stake. The company had over 10,000 employees in 2020, and Kim was once the richest person in South Korea, boasting an estimated fortune 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.”
“It will be up to those remaining in the company to demonstrate that it can continue to operate effectively even in the absence of its founder,” he commented.