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 takeover attempt last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued a warrant for his arrest amid concerns that he might flee the country or destroy evidence.
In a meeting with staff last week, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old Kim is accused of influencing the stock of SM Entertainment during a takeover last year to thwart a competing bid from Hybe, another leading K-pop agency.
SM Entertainment and Hybe are major players in the South Korean music industry, representing popular groups like Aespa and BTS, respectively.
Kakao eventually succeeded in acquiring SM Entertainment. Last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Kim established Kakao in 2010, with the company’s headquarters in Jeju City. He owns approximately 24% of the company, which employed more than 10,000 people in 2020. At one time, he was the richest person in South Korea, with a 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, remarked that this could be Kakao’s “biggest crisis,” adding that it will be essential for the company’s remaining leadership to demonstrate that it can continue to operate effectively in Kim’s absence.