A billionaire South Korean tech entrepreneur was arrested on Tuesday over allegations of stock price manipulation related to a prominent K-pop agency.
Kim Beom-su, the founder of tech giant Kakao, has not yet been formally charged. A Seoul Southern District Court issued an arrest warrant amid concerns that he may attempt to flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company expressed that his arrest is “unfortunate.”
The 58-year-old businessman is accused of artificially inflating the stock of SM Entertainment during a acquisition effort last year, allegedly to thwart the purchase of the agency by rival K-pop entity Hybe.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular acts such as Aespa and BTS. Kakao eventually went on to acquire SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim established Kakao in 2010, and as of 2020, it had over 10,000 employees. He held around a 24% stake in the company and was once regarded as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock price fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” highlighting the importance of the company’s ability to function without its founder.