A South Korean billionaire and tech mogul was taken into custody on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology company Kakao, has not been formally charged, according to the New York Times. The Seoul Southern District Court issued an arrest warrant for him, citing concerns that he might flee or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, as reported by the Times. The company described the arrest as “unfortunate.”
Kim, 58, is accused of manipulating the stock of SM Entertainment during a takeover last year to prevent Hybe, another prominent K-pop agency, from acquiring it. SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing Aespa and BTS respectively.
Kakao eventually acquired SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on stock manipulation charges.
Kim established Kakao in Jeju City in 2010. Holding about a 24% stake in the company, which employed over 10,000 people in 2020, Kim was once South Korea’s wealthiest person with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, told the Times that this might be Kakao’s “biggest crisis.”
“It would be the job of those who remain at the company to show that it can run well even with the founder not around,” he commented.