A South Korean billionaire and technology leader 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 tech company Kakao, has not been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him out of concern that he might flee the country or tamper with evidence.
In a staff meeting at Kakao last week, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover bid last year, allegedly as part of a plan to prevent rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe represent two of Korea’s largest K-Pop companies, managing popular groups such as Aespa and BTS, respectively.
Kakao ultimately acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, faced charges related to stock manipulation.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 workers as of 2020. At one time, he was South Korea’s wealthiest individual, with a 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, indicated that this incident could represent Kakao’s “biggest crisis.”
“It would be the responsibility of those remaining at the company to demonstrate that it can operate smoothly even in the absence of the founder,” he said.