A South Korean billionaire and tech entrepreneur, Kim Beom-su, was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim, the founder of the technology firm Kakao, has not yet faced formal charges. The Seoul Southern District Court issued an arrest warrant, citing concerns that he might flee the country or destroy evidence.
In a recent company meeting, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao expressed that the arrest was “unfortunate.”
At 58 years old, Kim is accused of orchestrating the manipulation of SM Entertainment’s stock during a takeover to obstruct Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe are among the largest K-Pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually went on to acquire SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010 and holds approximately a 24% stake in the company, which employed over 10,000 people in 2020. He was once recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
In response to the arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, indicated that this could be Kakao’s “biggest crisis,” emphasizing that it will be crucial for the remaining leadership to demonstrate the company can operate effectively without its founder.