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 transaction last year.
Kim Beom-su, the founder of the technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him, citing concerns that he might flee the country or destroy evidence.
Kim denied the allegations, stating at a staff meeting at Kakao last week that he has never instructed or condoned any illegal activities. Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart Hybe, another major K-pop agency, from acquiring it. SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually took over SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on stock manipulation charges.
Kim founded Kakao in 2010 in Jeju City, where he still holds approximately a 24% stake. The company employed over 10,000 people in 2020 and at one time, Kim was recognized as South Korea’s richest person, with a net worth exceeding $13 billion.
Following the news of his 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,” emphasizing the need for the remaining staff to demonstrate that the company can function effectively without its founder.