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 transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him due to concerns that he might flee the country or destroy evidence.
Kim asserted during a company meeting that the allegations against him are unfounded, stating, “I have never instructed or condoned any illegal acts.” Kakao described the situation as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment amid a takeover last year to thwart the acquisition efforts by Hybe, another significant player in the K-pop industry.
Both SM Entertainment and Hybe are major companies in South Korea’s K-pop landscape, representing major acts such as Aespa and BTS. Kakao eventually acquired SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
In response to the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this could represent Kakao’s “biggest crisis,” emphasizing the importance for the remaining leadership to demonstrate that the company can continue to operate effectively without its founder.