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 takeover last year.
Kim Beom-su, founder of the tech firm 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.
“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 the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment as part of a strategy to thwart the acquisition attempt by Hybe, another leading K-pop agency.
SM Entertainment and Hybe are two of the largest K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively. Ultimately, Kakao acquired SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, and he holds approximately a 24% stake in the company, which employed over 10,000 individuals in 2020. He was once recognized as South Korea’s richest person, with an estimated net worth exceeding $13 billion.
On Tuesday, hints of his arrest led to a 5% drop in Kakao’s stock price.
Woochan Kim, a professor at Korea University Business School, mentioned that this situation could represent Kakao’s “biggest crisis.” He commented, “It would be the job of those who remain at the company to demonstrate that it can operate effectively even in the absence of the founder.”