A billionaire South Korean tech entrepreneur has been arrested on accusations of manipulating stock prices of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of technology giant Kakao, has not yet been officially charged, according to reports. The Seoul Southern District Court issued an arrest warrant for Kim, amidst concerns from prosecutors that he might flee the country or destroy evidence related to the case.
Kim, 58, has denied the allegations, stating in a staff meeting at Kakao that he has never advised or sanctioned any illegal activities. The company described the arrest as “unfortunate.”
He is accused of influencing the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two leading firms in the South Korean K-Pop industry, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted for stock manipulation.
Kim founded Kakao, which is based in Jeju City, in 2010 and retains about a 24% ownership stake in the company, which employed over 10,000 people as of 2020. He was once considered the richest person in South Korea, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock experienced a 5% decline. A business professor has suggested that this could represent the “biggest crisis” for Kakao, emphasizing the importance for the remaining leadership to demonstrate that the company can operate effectively in the founder’s absence.