A South Korean billionaire and tech entrepreneur was apprehended on Tuesday for allegedly influencing the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for his detention, 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 during a staff meeting at Kakao last week. The company deemed the arrest “unfortunate.”
Now 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover bid last year to hinder Hybe, another significant K-pop agency, from acquiring it.
SM Entertainment and Hybe are among South Korea’s biggest K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges related to stock manipulation.
Kim established the company, based in Jeju City, in 2010. He held about a 24% stake in the firm, 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 be Kakao’s “biggest crisis.”
“It will be the responsibility of those who remain at the company to demonstrate that it can continue to operate effectively without the founder,” he said.