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 firm Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court authorized his arrest amid concerns that he might flee the country or tamper with evidence.
In a meeting with staff at Kakao, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the shares of SM Entertainment during a takeover attempt last year, allegedly to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two leading K-Pop agencies in South Korea, representing popular groups like Aespa and BTS.
Kakao ultimately completed the acquisition of 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 he held approximately a 24% stake in the company as of 2020, when it employed over 10,000 people. At one point, he was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Korea University Business School professor Woochan Kim commented that this incident could represent Kakao’s “biggest crisis,” emphasizing the importance for remaining company leadership to demonstrate its capability to function effectively without its founder.