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 transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court granted an arrest warrant, fearing that Kim might attempt to flee the country or conceal evidence.
In a recent staff meeting at Kakao, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company has described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of influencing the stock of SM Entertainment during a takeover bid last year to obstruct another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two leading companies in the K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao ultimately secured the acquisition of SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges.
Kim founded Kakao in 2010, with its headquarters in Jeju City. He owns roughly 24% of the company, which had over 10,000 employees in 2020. At one point, he was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock price fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this incident could represent Kakao’s “biggest crisis.” He noted that it would be crucial for the remaining leadership at the company to demonstrate that it can operate effectively without its founder.