A South Korean billionaire and tech 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 technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant for him amid concerns from prosecutors that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, denying the allegations. The company expressed that the arrest is “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly aiming to thwart rival agency Hybe’s acquisition of the company.
SM Entertainment and Hybe are two of South Korea’s largest K-pop firms, representing popular groups Aespa and BTS, respectively.
Eventually, Kakao acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim established Kakao, headquartered in Jeju City, in 2010. He holds approximately a 24% stake in the company, which employed over 10,000 individuals in 2020. Once regarded as South Korea’s wealthiest person, his net worth was estimated at over $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could mark Kakao’s “biggest crisis.”
“It will be up to the remaining members of the company to demonstrate that it can operate effectively in the absence of the founder,” he noted.