A South Korean billionaire and technology executive was apprehended on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, which is a leading technology company, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant, as prosecutors expressed concerns that he might flee the country or attempt to destroy evidence.
In a recent meeting with staff at Kakao, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of interfering with the stock of SM Entertainment during a takeover, allegedly to thwart Hybe, another major K-pop agency, from acquiring it.
SM Entertainment and Hybe are among the largest K-Pop companies in South Korea, with key artists including Aespa and BTS under their management.
Kakao eventually completed the acquisition of SM Entertainment. Additionally, last year, Bae Jae-hyun, Kakao’s chief investment officer, was indicted on charges of stock manipulation.
Kim founded Kakao in 2010, and he holds about a 24% stake in the company, which employed over 10,000 individuals in 2020. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated 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, remarked that this could be Kakao’s “biggest crisis.” He emphasized that it would be up to the remaining leadership to demonstrate the company’s capability to operate effectively without its founder.