A South Korean billionaire and tech entrepreneur was arrested on Tuesday for alleged stock price manipulation involving a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology company Kakao, has not been officially charged yet. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he could flee the country or destroy evidence.
Kim has denied the allegations, stating in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment last year during a takeover attempt to block Hybe, another prominent K-pop agency, from acquiring it. SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups like Aespa and BTS.
Kakao eventually took over SM Entertainment, and last year, Kakao’s chief investment officer was also indicted on stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao was led by Kim, who holds approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was South Korea’s richest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5%. A professor at Korea University Business School suggested that this could represent Kakao’s “biggest crisis,” emphasizing the importance for those remaining at the company to demonstrate its resilience in Kim’s absence.