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 the technology company Kakao, has not yet been officially charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court as prosecutors expressed 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 has described his arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover bid last year, part of a strategy to block Hybe, another significant K-pop agency, from gaining control.
SM Entertainment and Hybe are two leading K-Pop firms in South Korea, associated with popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Additionally, last year, Kakao’s chief investment officer Bae Jae-hyun faced indictment on stock manipulation allegations.
Founded by Kim in 2010 and based in Jeju City, Kakao employs over 10,000 people and saw Kim holding roughly a 24% stake in the company as of 2020. At one time, 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 price dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing the responsibility of remaining leadership to demonstrate the company can thrive without its founder.