A South Korean billionaire and tech entrepreneur was arrested on Tuesday on allegations of stock price manipulation involving a major K-pop agency during a deal that took place last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been formally charged, as reported by the New York Times. The Seoul Southern District Court granted an arrest warrant for his custody, concerned that he might flee the country or destroy evidence.
“I categorically deny the allegations. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, according to the Times. Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover bid last year, allegedly to sabotage Hybe, another prominent K-pop agency from acquiring it.
Both SM Entertainment and Hybe are key players in South Korea’s K-pop industry, with SM representing groups like Aespa and Hybe associated with BTS. Ultimately, Kakao completed its acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted for stock manipulation.
Kim established Kakao, based in Jeju City, in 2010. He owned approximately 24% of the company, which employed over 10,000 people in 2020. At one point, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this situation might represent Kakao’s “biggest crisis.” He emphasized the responsibility of those remaining at the company to demonstrate its ability to operate effectively without the founder.