A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a significant K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant for him amid concerns from prosecutors that he might attempt to flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of influencing the stock of SM Entertainment during a takeover last year to obstruct another major K-pop agency, Hybe, from acquiring it.
Both SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups such as Aespa and BTS, respectively.
Kakao eventually took over SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. He was once regarded as South Korea’s richest person, with a net worth exceeding $13 billion. Following the announcement of his arrest, Kakao’s stock price dropped by 5%.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.” He emphasized that it would now be up to those remaining at the company to demonstrate that it can continue to operate effectively without its founder.