A South Korean billionaire and tech executive was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court has issued an arrest warrant to bring him into custody, as prosecutors are concerned that he may attempt to 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.”
Kim, 58, is accused of manipulating the stock of SM Entertainment during a takeover last year, allegedly as part of a strategy to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao employed over 10,000 people as of 2020, with Kim holding about a 24% stake in the company. At one time, he was regarded as South Korea’s wealthiest individual, with an estimated 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 be Kakao’s “biggest crisis,” adding that it will be crucial for the remaining leadership to demonstrate that the company can continue to operate effectively in Kim’s absence.