A prominent South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to the New York Times. The Seoul Southern District Court issued an arrest warrant to ensure his presence, as prosecutors expressed concerns that he could flee the country or destroy evidence.
During a staff meeting at Kakao last week, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao also described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart Hybe, another leading K-pop agency, from acquiring the company.
SM Entertainment and Hybe are two of the largest K-Pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a major tech firm where Kim holds approximately a 24% stake. The company employed over 10,000 people as of 2020, and Kim was once recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock plummeted by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis,” emphasizing that it is now up to those remaining at the company to demonstrate that it can operate effectively without its founder.