A South Korean billionaire and technology leader was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. A Seoul Southern District Court issued an arrest warrant, expressing concerns that he might flee the country or destroy evidence.
Kim, 58, has denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart a competing bid from Hybe, another prominent K-pop company.
Both SM Entertainment and Hybe are major players in the South Korean K-pop industry, representing artists like Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao has grown significantly, with Kim holding about a 24% stake in the company and employing over 10,000 people as of 2020. At one point, he was the wealthiest individual in South Korea, with a net worth exceeding $13 billion.
Following the arrest news, Kakao’s stock saw a decline of 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, indicated that this situation could represent Kakao’s “biggest crisis.” He emphasized the importance of remaining company leaders proving that operations can continue effectively in Kim’s absence.