A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a business transaction last year.
Kim Beom-su, the founder of tech giant Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant, 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 described his arrest as “unfortunate.”
The 58-year-old businessman is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, aiming to thwart another major K-pop agency, Hybe, from acquiring the company. SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups such as Aespa and BTS.
Kakao eventually secured the acquisition of SM Entertainment. Last year, the chief investment officer of Kakao, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao has seen significant growth, employing over 10,000 people by 2020. At one time, Kim was ranked as 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%. According to Woochan Kim, a professor at Korea University Business School, this may represent Kakao’s “biggest crisis.” He emphasized that it is now up to the remaining team at the company to demonstrate that it can continue to operate effectively without its founder.