A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly engaging in stock manipulation involving a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of technology company Kakao, has not yet been formally charged. A Seoul Southern District Court authorized his arrest, as prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim has publicly 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.” Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment during a takeover bid last year to thwart a competing acquisition attempt by Hybe, another leading K-pop agency.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop entities, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, while last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 in Jeju City, Kakao employs over 10,000 people as of 2020, and Kim previously held the title of South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, suggested that this incident could mark Kakao’s “biggest crisis.” He emphasized the importance of the remaining leadership in demonstrating the company’s stability in Kim’s absence.