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 technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for his detention amid concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated during a Kakao staff meeting last week. The company expressed that the arrest is “unfortunate.”
The 58-year-old entrepreneur is accused of influencing the stock of SM Entertainment during a takeover last year to thwart rival agency Hybe, another significant player in the K-pop industry.
SM Entertainment and Hybe are two of South Korea’s premier K-pop entities, representing top groups Aespa and BTS, respectively.
Kakao eventually completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was similarly indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a major employer, boasting over 10,000 staff members in 2020. At one point, Kim was recognized as South Korea’s richest individual, with an estimated wealth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, noted that this incident could represent “Kakao’s biggest crisis.” He emphasized that it is crucial for the remaining leadership to demonstrate that the company can operate effectively without its founder.