A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology company Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns from prosecutors that he might flee the country or destroy evidence.
Kim denied the allegations, stating during a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment amid a takeover attempt last year, aiming to thwart a bid by Hybe, another major K-pop agency.
SM Entertainment and Hybe are among the largest K-Pop companies in Korea, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Kim founded Kakao in 2010 and maintains roughly a 24% ownership stake in the company, which had more than 10,000 employees in 2020. At one point, he was the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock saw a decline of 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this incident could be Kakao’s “biggest crisis.” He noted, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”