A South Korean billionaire and 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 Kakao, has not yet been formally charged. According to reports, the Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
Kim has publicly denied the allegations, stating in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, aimed at thwarting rival Hybe’s acquisition of the company. SM Entertainment and Hybe are two of South Korea’s largest K-pop agencies, representing popular groups Aespa and BTS, respectively.
Kakao ultimately obtained SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao employs over 10,000 people, and Kim holds approximately a 24% stake in the company. At one time, he was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell 5%. Professor Woochan Kim of Korea University Business School indicated that this could represent “Kakao’s biggest crisis,” emphasizing the need for the remaining leadership to prove the company’s viability without its founder.