A South Korean billionaire and tech executive was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court due to fears that he might flee the country or destroy evidence.
Kim has publicly denied the allegations, asserting during a recent staff meeting at Kakao that he has never condoned or instructed any illegal actions. 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 Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing notable groups such as Aespa and BTS.
Kakao eventually acquired SM Entertainment, and last year, the company’s chief investment officer was indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a major player in the tech industry, with Kim holding approximately a 24% stake. At one point, he was considered the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock experienced a decline of 5%. A business professor at Korea University indicated that this may pose a significant challenge for Kakao, stating that it will be crucial for those remaining in the company to demonstrate its continued stability in the founder’s absence.