A South Korean billionaire and tech entrepreneur was arrested on Tuesday for alleged stock price manipulation involving a major K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence, according to reports.
Kim has denied the allegations, asserting in a recent staff meeting at Kakao that he has never endorsed or participated in any illegal activities. The company expressed disappointment over the arrest.
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover bid last year aimed at thwarting another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, and he held a significant 24% stake in the company, which employed over 10,000 people as of 2020. He was previously 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% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s most significant crisis and emphasized that it would be up to the remaining leadership to demonstrate the company’s resilience without its founder.