A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during an acquisition deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to detain him, as prosecutors expressed concerns he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim denied the allegations, stating, “I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of affecting the stock value of SM Entertainment as part of a plan to hinder another prominent K-pop agency, Hybe, from taking over the company.
SM Entertainment and Hybe are two of the largest K-Pop firms in South Korea, representing popular groups Aespa and BTS, respectively. Kakao eventually secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer also faced charges for stock manipulation.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people, and Kim owns roughly 24% of the company’s shares. At one time, he was deemed South Korea’s wealthiest individual, with an estimated fortune exceeding $13 billion.
Following Kim’s arrest, Kakao’s stock price fell by 5%. A professor from Korea University Business School commented that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for remaining executives to demonstrate the company’s capability to thrive without its founder.