A South Korean billionaire and tech executive was arrested 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. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated in a meeting with employees 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 attempt last year, in a bid to thwart a rival acquisition by another significant K-pop agency, Hybe.
SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, with SM representing the group Aespa and Hybe known for BTS.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, and the company, which he holds around a 24% stake in, employed over 10,000 people in 2020. At one point, he was South Korea’s richest individual, boasting an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Professor Woochan Kim from Korea University Business School remarked that this could be Kakao’s “biggest crisis,” emphasizing that it would be the responsibility of remaining executives to demonstrate that the company can operate effectively without its founder.