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, the founder of the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant for him, citing concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated during a company meeting at Kakao last week. The company described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, part of a strategy to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively. Kakao eventually completed the acquisition of SM Entertainment. Previously, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a significant player in the tech industry, with Kim holding approximately a 24% stake. At one point, Kim was 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 incident could represent Kakao’s “biggest crisis.”
“It will be the responsibility of those remaining at the company to demonstrate that it can operate effectively, even in the founder’s absence,” he noted.