A South Korean billionaire and tech entrepreneur has been arrested on allegations of stock price manipulation involving a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant for his detention amid concerns from prosecutors that he might flee the country or destroy evidence.
During a staff meeting at Kakao last week, Kim denied the accusations, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” In response to his arrest, the company described the situation as “unfortunate.”
At 58 years old, Kim faces accusations of manipulating shares of SM Entertainment during a takeover attempt last year, which was part of a plan to thwart the acquisition by rival K-pop agency Hybe.
SM Entertainment and Hybe are among South Korea’s largest K-Pop entities, representing popular groups Aespa and BTS, respectively. Ultimately, Kakao secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao employs over 10,000 individuals, with Kim retaining approximately a 24% stake in the firm. Once considered South Korea’s wealthiest individual, his net worth has been estimated at over $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, indicated that this incident could represent Kakao’s “biggest crisis,” suggesting that it is now up to those remaining at the company to demonstrate it can function effectively in Kim’s absence.