A South Korean billionaire and technology leader 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 yet been formally charged. Authorities issued an arrest warrant for him at the Seoul Southern District Court due to concerns 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 recent staff meeting at Kakao. The company described the arrest as “unfortunate.”
The accusations against Kim, 58, involve manipulation of SM Entertainment’s stock during a takeover attempt last year, which was allegedly aimed at thwarting Hybe, another leading K-pop agency, from acquiring SM.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively. Kakao eventually purchased SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun faced indictment on related stock manipulation charges.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock fell by 5%. A professor at Korea University Business School noted this incident could pose a significant challenge for Kakao, stating it would be essential for the remaining leadership to demonstrate that the company can continue to operate successfully without its founder.