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 transaction last year.
Kim Beom-su, the founder of tech firm Kakao, has not yet been formally charged. The Seoul Southern District Court authorized his arrest due to prosecutors’ concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
At 58 years old, Kim is alleged to have influenced the stock of SM Entertainment during a takeover attempt last year to block Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Kim established Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one time, he was the richest person in South Korea, with a 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, noted that this could be Kakao’s “biggest crisis,” adding that it would be up to the remaining team to demonstrate that the company can operate effectively without its founder.