A billionaire and tech entrepreneur from South Korea was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court approved an arrest warrant amid concerns from prosecutors that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim declared at a staff meeting at Kakao last week. The company expressed disappointment over the arrest, calling it “unfortunate.”
The 58-year-old is suspected of manipulating the shares of SM Entertainment during a takeover in order to thwart rival K-pop agency Hybe from acquiring the company.
SM Entertainment and Hybe are among the largest K-Pop companies in South Korea, managing popular groups Aespa and BTS, respectively.
Ultimately, Kakao managed to secure the acquisition of SM Entertainment. In a related development, Kakao’s chief investment officer Bae Jae-hyun was indicted last year on charges of stock manipulation.
Founded by Kim in 2010 and based in Jeju City, Kakao is a major player in the technology sector. Kim holds about a 24% stake in the company, which boasted over 10,000 employees in 2020. He was once recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing the need for remaining leadership to demonstrate the company’s stability without its founder.