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, founder of the technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure his appearance in court, citing concerns that he may attempt to flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim denied the allegations, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment during a takeover process last year, allegedly to obstruct Hybe, another major K-pop agency, from acquiring the company.
SM Entertainment and Hybe are among South Korea’s largest K-pop firms, with Aespa and BTS representing them, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Kim established Kakao, based in Jeju City, in 2010, and he held approximately a 24% stake in the company, which had more than 10,000 employees in 2020. He was once regarded as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing the need for the remaining team to demonstrate the company’s resilience in the founder’s absence.