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, founder of the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court has issued an arrest warrant for him due to concerns that he might flee the country or destroy evidence.
Kim, 58, has denied the allegations, stating during a staff meeting at Kakao that he has never authorized or condoned any illegal activities. Kakao described the arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment in connection with a takeover bid last year, allegedly 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 such as Aespa and BTS, respectively. Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Kim, who founded Kakao in 2010 and holds approximately a 24% stake in the company, oversaw a workforce of over 10,000 employees as of 2020. He was once regarded as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dipped by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, suggested that this might represent Kakao’s “biggest crisis,” emphasizing that it would be up to those remaining at the company to demonstrate its capability to thrive without the founder.