A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. A court in Seoul issued an arrest warrant to ensure his custody, as prosecutors are concerned he might attempt to flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim reportedly said during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover bid last year, aiming to block Hybe, a rival K-pop agency, from acquiring it. SM Entertainment and Hybe are two prominent players in South Korea’s K-pop industry, representing artists such as Aespa and BTS.
Kakao successfully acquired SM Entertainment, and last year, Bae Jae-hyun, the chief investment officer of Kakao, was also indicted on charges of stock manipulation.
Having established the company in 2010 and holding about a 24% stake, Kim saw Kakao employ over 10,000 individuals by 2020. At one time, he was the wealthiest person in South Korea, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s most significant crisis. “It would be the job of those who remain at the company to show that it can run well even without the founder,” he stated.