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 transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant amid 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 asserted at a Kakao staff meeting last week. The company described the arrest as “unfortunate.”
Kim, 58, is accused of orchestrating stock manipulation involving SM Entertainment during a takeover bid last year, aimed at blocking another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two leading companies in the South Korean K-pop industry, 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.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people. Kim, who holds approximately a 24% stake in the company, was at one time South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock plummeted by 5%.
Woochan Kim, a professor at Korea University Business School, remarked that this situation might represent Kakao’s “biggest crisis,” adding that it will be crucial for those still at the company to demonstrate effective management in Kim’s absence.