A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him to ensure his presence, as prosecutors expressed concerns that he might flee the country or destroy evidence.
During a staff meeting at Kakao last week, Kim maintained his innocence, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao referred to his arrest as “unfortunate.”
The 58-year-old businessman is accused of interfering with the stock of SM Entertainment amid a takeover attempt last year, aiming to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of the largest K-Pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao secured the acquisition of SM Entertainment. Last year, several stock manipulation charges were also filed against Kakao’s chief investment officer, Bae Jae-hyun.
Kim founded Kakao in 2010, and as of 2020, the company, located in Jeju City, employed over 10,000 people. At one time, he was South Korea’s richest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock experienced a decline of 5% on Tuesday.
Korea University Business School professor Woochan Kim suggested that this incident might represent Kakao’s “biggest crisis,” stating, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”