A prominent South Korean billionaire and tech entrepreneur was apprehended on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of technology giant Kakao, has not yet faced formal charges, according to reports. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old Kim is accused of manipulating shares of SM Entertainment during its takeover last year to thwart a potential acquisition by rival K-pop agency Hybe.
SM Entertainment and Hybe are among South Korea’s largest K-pop firms, with Aespa and BTS under their respective umbrellas.
Kakao completed the acquisition of SM Entertainment, while last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on similar charges of stock manipulation.
Kim established Kakao, which is based in Jeju City, in 2010. He holds approximately a 24% stake in the company, which had over 10,000 employees as of 2020. Once considered South Korea’s richest individual, Kim’s net worth was estimated at over $13 billion.
Following news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis.”
“It would be the job of those who remain at the company to show that it can function effectively even without the founder,” he commented.