A South Korean billionaire and technology leader 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 out of concern 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 described the arrest as “unfortunate.”
The 58-year-old is accused of worsening the stock value of SM Entertainment during a takeover effort last year, aiming to obstruct Hybe, another significant K-pop agency, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges.
Kim established the company in 2010, with its headquarters in Jeju City. He holds about a 24% stake in Kakao, which employed over 10,000 individuals in 2020. At one time, he was South Korea’s wealthiest individual, with an estimated 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 that this could represent Kakao’s “biggest crisis.”
“It would be the responsibility of those remaining at the company to demonstrate it can operate effectively even in the founder’s absence,” he remarked.