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 Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim asserted in a company meeting last week that the allegations were false, stating, “I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of tampering with the stock of SM Entertainment during a takeover attempt last year, aiming to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of the largest companies in the K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually took over SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun faced indictment on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao, in which Kim holds approximately a 24% stake, had over 10,000 employees as of 2020. Kim was once recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. A professor at Korea University Business School commented that this could represent Kakao’s “biggest crisis,” emphasizing that it will be essential for those remaining at the company to demonstrate its capability to operate effectively in Kim’s absence.