A South Korean billionaire and tech 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 the technology firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns from prosecutors that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company has described his arrest as “unfortunate.”
Kim, 58, is accused of engaging in stock manipulation involving SM Entertainment during a takeover attempt last year, aimed at obstructing rival agency Hybe from acquiring it. SM Entertainment and Hybe are among the largest K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually succeeded in acquiring SM Entertainment. Last year, the firm’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a significant player in the tech industry. Kim holds around a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated fortune exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%.
Woochan Kim, a professor at Korea University Business School, suggested that this could represent Kakao’s most significant crisis yet, stating, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”