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 technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to bring him into custody over concerns that he might flee the country or destroy evidence.
Kim denied the allegations during a staff meeting at Kakao last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The accusations against Kim involve alleged stock manipulation of SM Entertainment during a takeover bid last year, intended to thwart another major K-pop agency, Hybe, from acquiring it.
Both SM Entertainment and Hybe are leading figures in the K-pop industry, representing popular groups such as Aespa and BTS, respectively.
Ultimately, Kakao acquired SM Entertainment, and last year, Bae Jae-hyun, Kakao’s chief investment officer, was indicted on similar stock manipulation charges.
Founded in 2010 in Jeju City, Kakao is a major player in the tech industry in South Korea, with Kim holding a 24% stake in the company. It employed over 10,000 people in 2020 and at one point, Kim was recognized as South Korea’s richest person, with a net worth exceeding $13 billion.
In response to the arrest news, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this situation could represent Kakao’s “biggest crisis,” emphasizing that it is now up to the remaining executives to demonstrate the company’s ability to operate effectively without its founder.