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, 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 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 the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of affecting the stock performance of SM Entertainment during a takeover bid last year in an effort to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups like Aespa and BTS.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Founded in 2010, Kakao is based in Jeju City and has seen significant growth, employing over 10,000 people as of 2020. At one point, Kim was the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested this could be Kakao’s most significant crisis. “It will be the responsibility of those who continue at the company to demonstrate that it can thrive even without the founder,” he remarked.