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 takeover deal 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 an arrest warrant to ensure his presence, amidst concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
Kim, who is 58 years old, faces accusations of manipulating the stock of SM Entertainment during a takeover process last year to block Hybe, another significant K-pop agency, from acquiring it.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing artists such as Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a significant player in the tech industry. Kim holds approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was recognized as South Korea’s wealthiest individual, 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, commented that this could be Kakao’s “biggest crisis.” He added that it would be essential for remaining company leaders to demonstrate the capability to manage effectively without the founder’s direct involvement.