A South Korean billionaire and technology 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 the tech giant Kakao, has not received formal charges yet, according to reports. The Seoul Southern District Court authorized his arrest due to concerns that he might flee the country or destroy evidence.
Kim, 58, has denied the allegations, stating in a staff meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
He is accused of playing a role in manipulating the stock of SM Entertainment during a takeover attempt last year to thwart Hybe, another major K-pop agency, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-Pop agencies, representing groups such as Aespa and BTS.
Kakao eventually took control of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, also faced indictment on stock manipulation charges.
Founded by Kim in 2010, Kakao is based in Jeju City and employed over 10,000 people as of 2020. Kim was once the richest person in South Korea, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, noted that this could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s resilience in the absence of its founder.