A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
Kim addressed the allegations in a staff meeting at Kakao last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover bid last year, as part of a plan to deter Hybe, another prominent K-pop agency, from acquiring the company. SM Entertainment and Hybe are significant players in the South Korean music industry, representing popular groups like Aespa and BTS.
Kakao successfully acquired SM Entertainment, while Kakao’s chief investment officer Bae Jae-hyun was indicted last year on similar stock manipulation charges.
Kim founded Kakao in 2010, and he held about a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was considered South Korea’s richest individual, with a 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, remarked that this could represent Kakao’s “biggest crisis.” He emphasized the importance of the remaining leadership’s ability to manage the company effectively in Kim’s absence.