A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant, citing concerns that he might flee the country or destroy evidence.
Kim expressed his innocence during a recent staff meeting at Kakao, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company responded to the arrest, labeling it “unfortunate.”
The 58-year-old is accused of distorting the stock value of SM Entertainment during a takeover attempt as part of a plan to thwart rival 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 ultimately acquired SM Entertainment, and last year, the firm’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Kim founded Kakao, based in Jeju City, in 2010 and held a approximately 24% stake in the company, which employed over 10,000 people as of 2020. He was once considered South Korea’s richest individual, with an estimated 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 could be Kakao’s “biggest crisis,” adding that it will be up to remaining company leaders to demonstrate it can continue operating effectively in the absence of its founder.