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 negotiation last year.
Kim Beom-su, the founder of the technology company Kakao, has not yet been formally charged, according to reports. A warrant for his arrest was issued by the Seoul Southern District Court, with prosecutors expressing concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal activities,” Kim stated in a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old businessman is accused of manipulating the stock of SM Entertainment last year as part of a plot to thwart Hybe, another leading K-pop agency, from taking over.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop companies, representing famous acts such as Aespa and BTS, respectively.
Ultimately, Kakao ended up acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded the company in 2010, which is based in Jeju City. He owned approximately 24% of the company, which employed over 10,000 people in 2020. At one point, he was South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this incident could represent Kakao’s “biggest crisis.”
“It will be the responsibility of those who continue at the company to demonstrate that it can operate effectively even in the absence of its founder,” he noted.