A South Korean billionaire and tech entrepreneur was apprehended on Tuesday due to allegations of stock price manipulation related to a major K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet faced formal charges. An arrest warrant was issued by the Seoul Southern District Court, which expressed concerns that he might flee the country or tamper with evidence.
Kim, 58, denied the allegations, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent company meeting at Kakao. The firm described the situation as “unfortunate.”
He is accused of manipulating stock prices of SM Entertainment amid a takeover attempt last year, allegedly to thwart Hybe, another prominent K-pop agency, from acquiring the company.
Both SM Entertainment and Hybe are among the largest K-pop firms in South Korea, known for representing major acts like Aespa and BTS.
Kakao eventually secured the acquisition of SM Entertainment. Additionally, last year Bae Jae-hyun, the chief investment officer at Kakao, faced indictment for similar stock manipulation allegations.
Kim founded Kakao in 2010, and he holds a roughly 24% stake in the company, which had over 10,000 employees in 2020. He was once the wealthiest individual in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested this could mark Kakao’s “biggest crisis,” highlighting the challenge for remaining executives to demonstrate the company’s operational stability without its founder.