A South Korean billionaire and technology entrepreneur was arrested on Tuesday over allegations of manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure his custody, citing concerns that he might flee the country or destroy evidence.
“I deny the allegations. I have never instructed or condoned any illegal activities,” Kim stated in a recent meeting with Kakao staff. The company referred to his arrest as “unfortunate.”
The 58-year-old entrepreneur stands accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart rival agency Hybe from acquiring it. SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing popular acts such as Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Kim founded Kakao in 2010, which is based in Jeju City. He holds about a 24% stake in the company, which had over 10,000 employees as of 2020. At one point, he was considered the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock price fell by 5%.
Woochan Kim, a professor at Korea University Business School, suggested that this could be Kakao’s “biggest crisis,” emphasizing the importance of the remaining leadership to demonstrate the company’s viability without its founder.