A South Korean billionaire and tech 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 the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for his detention, citing concerns that he might flee the country or destroy evidence.
Kim has denied the allegations, stating in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old businessman is accused of manipulating the shares of SM Entertainment during a takeover attempt last year, with the goal of obstructing rival K-pop agency Hybe from acquiring it.
Both SM Entertainment and Hybe are significant players in South Korea’s K-Pop scene, with SM representing artists like Aespa and Hybe managing groups like BTS.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun also faced indictment on similar stock manipulation charges.
Kim founded Kakao in 2010, which is headquartered in Jeju City. He holds approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock experienced a decline of 5%. Woochan Kim, a professor at Korea University Business School, suggested that this could be “Kakao’s biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s ability to function effectively without its founder.