A South Korean tech billionaire was arrested on Tuesday on suspicion of 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 approved an arrest warrant amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim denied the allegations, asserting in a recent company meeting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover bid as part of a strategy to block Hybe, another leading K-pop agency, from purchasing it.
SM Entertainment and Hybe are among the largest K-Pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately secured the acquisition of SM Entertainment. In addition, last year, Kakao’s chief investment officer Bae Jae-hyun faced similar stock manipulation charges.
Kim founded Kakao in 2010, with its headquarters in Jeju City. He holds around a 24% stake in the company, which employed over 10,000 people in 2020. At one time, Kim was regarded as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock price fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this incident could represent Kakao’s “biggest crisis,” adding that it would be crucial for the remaining company officials to demonstrate that the business can thrive without its founder.