A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant for him due to concerns that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
Kim, who is 58 years old, is accused of manipulating the stock of SM Entertainment to thwart a takeover by Hybe, another leading K-pop agency. SM Entertainment and Hybe are among the biggest names in the K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Kim established Kakao in 2010, with its headquarters located in Jeju City. He held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%.
Woochan Kim, a professor at Korea University Business School, commented that this could represent “Kakao’s biggest crisis.” He noted that it will be crucial for the remaining leadership to demonstrate that the company can continue to function effectively without its founder.