A South Korean billionaire and tech entrepreneur was apprehended 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 faced formal charges, according to reports. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concern that he might flee the country or destroy evidence.
During a staff meeting at Kakao last week, Kim claimed, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has described the arrest as “unfortunate.”
The 58-year-old is accused of stock manipulation involving SM Entertainment during a takeover effort last year, allegedly aimed at thwarting Hybe, another significant K-pop agency, from acquiring the company.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop firms, representing the groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Kim established Kakao in 2010 in Jeju City and holds approximately a 24% stake in the company, which had more than 10,000 employees in 2020. He was considered South Korea’s richest individual at one time, with an estimated fortune exceeding $13 billion.
Following news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this incident could represent Kakao’s “biggest crisis.” He indicated that it would be up to those remaining in the company to demonstrate its ability to operate successfully in the founder’s absence.