A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant over concerns that he might attempt to flee the country or destroy evidence related to the case.
“I have never instructed or condoned any illegal acts,” Kim asserted during a staff meeting at Kakao last week, referring to the allegations as unfounded. The company described the arrest as “unfortunate.”
At 58, Kim is accused of manipulating the stock of SM Entertainment in an effort to thwart the acquisition of the agency by Hybe, another prominent player in the K-pop industry.
SM Entertainment and Hybe are among the largest K-pop firms in South Korea, representing popular groups including Aespa and BTS.
Kakao ultimately acquired SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on similar stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao, which Kim holds roughly a 24% stake in, employed over 10,000 people as of 2020. Kim was once South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock slipped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this situation might represent Kakao’s “biggest crisis.” He added, “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.”