A South Korean billionaire and tech executive 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, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant for him amid concerns from prosecutors that he might attempt to flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated during a staff meeting at Kakao last week, according to the Times. The company described his arrest as “unfortunate.”
The 58-year-old entrepreneur is suspected of manipulating the stock of SM Entertainment during a takeover bid last year, allegedly as part of a scheme to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of the largest K-Pop companies in South Korea, representing popular groups Aespa and BTS respectively.
Ultimately, Kakao went on to acquire SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010 and holds approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was the richest person in South Korea, with an estimated 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, remarked that this could represent Kakao’s “biggest crisis.”
“It would be the job of those who remain at the company to demonstrate that it can operate effectively even without the founder,” he noted.