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 Kakao, has not yet been officially charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him due to concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim asserted his innocence, saying, “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 interfering with the stock of SM Entertainment during a takeover effort last year, allegedly to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop companies, representing artists Aespa and BTS, respectively.
Kakao eventually took control of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a major player in the tech industry. Kim held roughly a 24% stake in the company, which employed over 10,000 people in 2020. He was once regarded as South Korea’s wealthiest individual, with a net worth exceeding $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, commented that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate effective management in Kim’s absence.