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 last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet faced formal charges, according to the New York Times. The Seoul Southern District Court issued an arrest warrant to ensure his custody as prosecutors expressed concerns about the possibility of him fleeing the country or destroying evidence.
Kim has denied the allegations, saying during a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao referred to his arrest as “unfortunate.”
The 58-year-old entrepreneur is alleged to have manipulated the stock of SM Entertainment during a takeover last year to thwart a bid by Hybe, another leading K-pop agency.
Both SM Entertainment and Hybe are significant players in the K-pop industry, representing popular groups like Aespa and BTS, respectively.
Eventually, Kakao completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Kim established the company in 2010, which is based in Jeju City. He held around a 24% ownership stake in Kakao, which employed over 10,000 people as of 2020. At one point, he was the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this situation could represent Kakao’s “biggest crisis.” He emphasized that it would now be up to those remaining at the company to demonstrate that it can operate effectively without its founder.