A South Korean billionaire and technology 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 the tech firm Kakao, has not yet been formally charged, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant, expressing concerns that he might attempt to flee the country or destroy evidence.
Kim, 58, denied the allegations during a staff meeting at Kakao last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao referred to his arrest as “unfortunate.”
He is under investigation for allegedly manipulating the stock of SM Entertainment during a takeover attempt last year, in order to thwart another major K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are among the leading K-Pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately completed the acquisition of SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar charges of stock manipulation.
Kim established Kakao in 2010 and holds approximately a 24% stake in the company, which employed over 10,000 individuals as of 2020. He was once regarded as South Korea’s richest person, 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, suggested this could represent the company’s “biggest crisis,” stating that it will be essential for those remaining at the company to demonstrate its ability to operate successfully without its founder.