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 company Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant for him amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim asserted during a staff meeting at Kakao last week that “the allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover bid last year, allegedly to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two leading K-Pop companies in South Korea, representing popular groups such as Aespa and BTS, respectively.
Ultimately, Kakao acquired SM Entertainment. Last year, Kakao’s chief investment officer was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao employed over 10,000 people in 2020, with Kim holding approximately a 24% stake in the company. At one point, he was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
News of his arrest caused Kakao’s stock to decline by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested that this could be Kakao’s “biggest crisis.” He noted that it would be up to those who remain at the company to prove that it can continue to operate effectively without its founder.