A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant due to concerns that he might attempt to flee the country or destroy evidence.
Kim has denied the allegations, stating in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the shares of SM Entertainment amid a takeover attempt to block rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing artists such as Aespa and BTS.
Kakao successfully acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, which is based in Jeju City. He held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this situation might represent Kakao’s “biggest crisis.” He emphasized the responsibility of those remaining in the company to demonstrate that it can continue to function effectively in the founder’s absence.