A South Korean billionaire and tech leader 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 technology giant Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court, with prosecutors concerned that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of stock manipulation involving SM Entertainment during a takeover attempt last year, which allegedly aimed to obstruct another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among the largest K-Pop companies in South Korea, representing popular groups Aespa and BTS, respectively. Kakao eventually secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Kim established Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, Kim was South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s most significant crisis, emphasizing the need for the company’s remaining leadership to ensure it operates effectively without its founder.