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, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure he is taken into custody, as prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim has denied the allegations, asserting, “I have never instructed or condoned any illegal acts,” during a recent staff meeting at Kakao. The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of engaging in stock manipulation related to SM Entertainment during a takeover effort last year, aimed at thwarting a bid by Hybe, another leading K-pop company.
SM Entertainment and Hybe are two of South Korea’s foremost K-Pop companies, representing the girl group Aespa and the globally popular boy band BTS, respectively.
Kakao eventually acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Since founding Kakao in 2010, Kim has maintained a roughly 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could pose Kakao’s “biggest crisis,” noting that it will now be up to the remaining leaders at the company to demonstrate its viability in Kim’s absence.