A South Korean billionaire and tech entrepreneur was arrested on Tuesday amid allegations of stock price manipulation involving 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, according to reports. An arrest warrant was issued by the Seoul Southern District Court to ensure his custody, as prosecutors expressed concerns that he might flee the country or destroy evidence.
In a recent company meeting, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has described his arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment during a takeover last year, allegedly to thwart competitor Hybe from purchasing the company.
SM Entertainment and Hybe are two of the largest K-Pop entities in South Korea, representing prominent groups like Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, but last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao employs over 10,000 people, and Kim holds approximately a 24% stake in the company. Once recognized as South Korea’s wealthiest individual, his net worth was estimated at over $13 billion.
Following news of his arrest, Kakao’s stock plummeted by 5%. Professor Woochan Kim from Korea University Business School indicated that this situation could represent “Kakao’s biggest crisis,” emphasizing the need for the remaining leadership to maintain effective operations in Kim’s absence.