A South Korean billionaire and technology 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 tech firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court authorized an arrest warrant for him due to concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated during a staff meeting at Kakao last week. The company referred to the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt, aiming to hinder Hybe, another leading K-pop agency, from acquiring the company.
SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular groups Aespa and BTS respectively.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a major player in the tech industry, with Kim owning approximately 24% of the company, which had over 10,000 employees in 2020. At one point, Kim was the wealthiest person in South Korea, with a net worth surpassing $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 might represent Kakao’s “biggest crisis.” He noted that it will be crucial for the remaining executives to demonstrate that the company can operate successfully even in the absence of its founder.