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 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 a warrant for his arrest, citing concerns that he might flee the country or destroy evidence.
Kim denied the allegations during a staff meeting at Kakao last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company referred to the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment in an effort to hinder Hybe, another key K-pop agency, from acquiring it last year.
SM Entertainment and Hybe represent two of the largest K-pop companies in the country, with artists like Aespa and BTS under their management.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao is a major player in South Korea’s tech industry, with Kim holding approximately a 24% stake in the company. In 2020, it employed over 10,000 people and 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 fell by 5%. Woochan Kim, a professor at Korea University Business School, suggested that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining company leadership to demonstrate effective management in Kim’s absence.