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 that took place 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.
In a recent staff meeting, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the news of his arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, known for managing popular groups Aespa and BTS, respectively.
Kakao eventually secured a deal to acquire SM Entertainment. Additionally, last year, Kakao’s chief investment officer Bae Jae-hyun was indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao, in which Kim holds approximately a 24% stake, had over 10,000 employees as of 2020. At one time, Kim was recognized as South Korea’s wealthiest person, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this situation represents potentially “the biggest crisis” for Kakao. He emphasized that it is now up to the remaining executives to demonstrate that the company can operate effectively without its founder.