A South Korean billionaire and tech entrepreneur was arrested 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 technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court approved an arrest warrant to detain him amid concerns that he might flee the country or destroy evidence.
Kim denied the allegations, stating at a recent company meeting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating shares of SM Entertainment last year to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, while last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges.
Founded in 2010 in Jeju City, the company is estimated to have employed over 10,000 people in 2020. At one point, Kim was South Korea’s richest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock price decreased by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this situation could represent Kakao’s “biggest crisis,” adding that it would be essential for the remaining team to demonstrate that the company can operate effectively without its founder.