A South Korean billionaire and tech entrepreneur was arrested on Tuesday under allegations of 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 been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence.
Kim expressed his innocence during a staff meeting at Kakao last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old Kim is accused of tampering with the stock of SM Entertainment amidst a takeover bid last year, allegedly part of a scheme to block another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-pop companies, with Aespa under SM and BTS under Hybe.
Kakao eventually secured the acquisition of SM Entertainment. Notably, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted last year on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao, where Kim holds a 24% stake, employed more than 10,000 people as of 2020. At one point, Kim was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
In the wake of the arrest, Kakao’s stock fell by 5%. A professor at Korea University Business School, Woochan Kim, commented that this could represent Kakao’s “biggest crisis,” emphasizing the need for the company to demonstrate stability in the founder’s absence.