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 deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed 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 in a recent staff meeting at Kakao. The company described his arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of orchestrating stock manipulation of SM Entertainment during a takeover bid last year, aimed at thwarting Hybe, another major K-pop agency, from acquiring it.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing notable groups such as Aespa and BTS.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one point, he was recognized as South Korea’s richest person, with an estimated wealth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price fell by 5% on Tuesday. According to Woochan Kim, a professor at Korea University Business School, this incident may represent Kakao’s “biggest crisis.”
“It will be the responsibility of those who remain at the company to demonstrate that it can operate effectively even in the absence of its founder,” he remarked.