A South Korean billionaire and technology tycoon 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 tech firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court approved an arrest warrant, as prosecutors expressed concerns that he might attempt to flee the country or destroy evidence.
Kim declared that the allegations are false, stating, “I have never instructed or condoned any illegal acts,” during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of orchestrating stock manipulation involving SM Entertainment during a takeover that aimed to hinder the rival K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are two of South Korea’s leading K-pop firms, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun also faced indictment on stock manipulation charges.
Kim founded Kakao in 2010, with its headquarters in Jeju City. As of 2020, the company employed over 10,000 people, and he held around a 24% stake in it. At one point, Kim was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock experienced a 5% decline on Tuesday.
Woochan Kim, a professor at Korea University Business School, stated that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining team members to demonstrate that the company can operate effectively without its founder.