A South Korean billionaire and technology executive was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court authorized his arrest due to concerns that he might flee the country or destroy evidence.
Kim maintained his innocence during a staff meeting at Kakao last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt to prevent rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe are among the largest K-Pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, Kakao’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 retains about a 24% stake in the company, which employed more than 10,000 people in 2020. At one time, he was considered South Korea’s richest person, with an estimated net worth surpassing $13 billion.
Following the announcement of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be the company’s “biggest crisis,” suggesting that it will be up to remaining executives to demonstrate that Kakao can operate effectively without its founder.