A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock prices of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech giant Kakao, has not yet been formally charged. The Seoul Southern District Court has issued an arrest warrant for his custody due to concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, asserting his innocence. The company expressed that the arrest is “unfortunate.”
Kim, 58, is accused of improperly affecting the stock of SM Entertainment during a takeover last year, intending to thwart the acquisition attempts by another major K-pop agency, Hybe.
SM Entertainment and Hybe are two leading K-pop companies in South Korea, representing popular groups such as Aespa and BTS, respectively.
Kakao eventually purchased SM Entertainment. In connection with this case, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted last year on charges of stock manipulation.
Founded by Kim in 2010 and headquartered in Jeju City, Kakao is a major player in the tech industry, employing over 10,000 people as of 2020. Kim was once considered the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this incident could represent Kakao’s “biggest crisis.” He emphasized that it would now be up to the remaining executives to demonstrate that the company can operate successfully without its founder.