A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction that took place last year.
Kim Beom-su, the founder of the tech company 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 due to concerns that he might flee the country or destroy evidence.
Kim asserted during a recent staff meeting at Kakao that the allegations against him are false, stating, “I have never instructed or condoned any illegal acts.” Kakao regarded the arrest as “unfortunate.”
The 58-year-old businessman is accused of artificially inflating the stock of SM Entertainment during a takeover process, which was part of an effort to inhibit Hybe, another significant K-pop agency, from acquiring the company.
SM Entertainment and Hybe are two of the leading K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively. Kakao eventually succeeded in acquiring SM Entertainment, but last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao is majority-owned by Kim, who held approximately a 24% stake as of 2020 and employed over 10,000 people. At one point, Kim was the wealthiest individual in South Korea, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing that it will be crucial for the remaining executives to demonstrate effective leadership in Kim’s absence.