A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a deal conducted last year.
Kim Beom-su, the founder of the tech firm Kakao, has not been officially charged, according to reports. The Seoul Southern District Court has issued an arrest warrant for him amid concerns from prosecutors 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 during a staff meeting at Kakao last week. The company expressed that the arrest was “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock related to SM Entertainment during a takeover attempt last year, aiming to prevent Hybe, another major K-pop agency, from acquiring the company.
Kakao eventually succeeded in acquiring SM Entertainment, while last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a major player in the tech industry, with Kim holding approximately a 24% stake. The company employed over 10,000 people as of 2020, and at one point, he was the wealthiest individual in South Korea, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock saw a decline of 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis.” He indicated that it would be essential for those who remain in the company to demonstrate its ability to function effectively in the founder’s absence.