A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock prices of a major K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court, with prosecutors expressing concerns that he might leave the country or tamper with evidence.
In a staff meeting at Kakao last week, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company later described the arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment amid a takeover last year, allegedly to thwart the acquisition by another leading K-pop agency, Hybe. SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing artists such as Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao is a significant player in the tech industry, with Kim owning about a 24% stake. The company employed over 10,000 people as of 2020 and Kim was once considered South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price fell by 5%. Woochan Kim, a professor at Korea University Business School, noted that this could be Kakao’s “biggest crisis.” He emphasized the need for the remaining leadership to demonstrate that the company can operate successfully without its founder.