A prominent South Korean billionaire and tech executive was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued a warrant for his arrest amid concerns from prosecutors that he might flee the country or destroy evidence related to the case.
“I have never instructed or condoned any illegal actions,” Kim stated during a staff meeting at Kakao last week. The company described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment in an effort to thwart the rival K-pop agency Hybe from acquiring the company last year.
SM Entertainment and Hybe are two of South Korea’s leading K-pop firms, representing popular groups Aespa and BTS, respectively.
Kakao eventually succeeded in acquiring SM Entertainment. Last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao is a major player in the tech industry. Kim holds approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock dropped by 5%. A professor at Korea University Business School commented that this event could represent Kakao’s “biggest crisis,” suggesting that it would be crucial for the remaining leadership to demonstrate that the company can function effectively without its founder.