A South Korean billionaire and prominent tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure his custody due to concerns that he might flee the country or destroy evidence.
Kim, 58, asserted in a staff meeting at Kakao last week that the allegations are false, stating, “I have never instructed or condoned any illegal acts.” Kakao referred to the arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment during a takeover last year to thwart Hybe, another leading K-pop agency, from acquiring the company.
SM Entertainment and Hybe are among South Korea’s largest K-Pop companies, managing famous groups Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment. Additionally, last year, Kakao’s chief investment officer Bae Jae-hyun was indicted on similar stock manipulation charges.
Kim founded Kakao, headquartered in Jeju City, in 2010. He owned about a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested that this might represent Kakao’s “biggest crisis.” He emphasized that it will be vital for those remaining in the company to demonstrate that it can continue to function effectively in the absence of its founder.