A South Korean billionaire and tech entrepreneur was apprehended 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 authorized his arrest amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim asserted at a Kakao staff meeting last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of stock manipulation involving SM Entertainment during a takeover attempt last year, as part of a strategy to hinder another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao succeeded in acquiring SM Entertainment. In a related incident last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Kim established Kakao in 2010, with its headquarters in Jeju City. He held around a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following 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 that it would be essential for the remaining team members to demonstrate that the company can operate effectively without its founder.