A South Korean billionaire and tech executive 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 tech company Kakao, has not been formally charged yet. According to reports, the Seoul Southern District Court issued an arrest warrant for him, as prosecutors expressed concerns that he might leave the country or destroy evidence related to the case.
Kim denied the allegations during a recent company meeting, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old businessman is accused of manipulating the stock of SM Entertainment in the midst of a takeover, allegedly to prevent rival K-pop agency Hybe from acquiring the company. SM Entertainment and Hybe are major players in the K-pop industry, representing popular acts such as Aespa and BTS.
Kakao eventually completed its acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one point, he was recognized as South Korea’s richest person, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock value fell by 5%. Woochan Kim, a professor at Korea University Business School, indicated that this situation could represent Kakao’s “biggest crisis,” emphasizing that it will be crucial for the remaining leadership to demonstrate the company can operate effectively without its founder.