A South Korean billionaire and tech entrepreneur was arrested on Tuesday on allegations of stock price manipulation involving a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant for him amidst concerns from prosecutors that he might flee the country or destroy evidence.
“The allegations are false. I have never instructed or condoned any illegal acts,” Kim stated in a staff meeting at Kakao last week, according to the Times. The company described the arrest as “unfortunate.”
The 58-year-old businessman is accused of manipulating stock in SM Entertainment during a takeover bid last year, allegedly to block Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop companies, managing iconic groups such as Aespa and BTS, respectively.
Ultimately, Kakao obtained SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on similar stock manipulation charges.
Kim established Kakao, headquartered in Jeju City, in 2010. He holds approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one time, he was the wealthiest individual 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 could represent Kakao’s “biggest crisis.”
“It will be up to those who remain at the company to demonstrate that it can operate successfully even in the absence of the founder,” he remarked.