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 deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to the New York Times. The Seoul Southern District Court issued an arrest warrant for him as prosecutors expressed concerns over the possibility of him fleeing the country or destroying evidence.
Kim stated in a meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment as part of a scheme to prevent competing K-pop agency Hybe from acquiring the company. SM Entertainment and Hybe are two of the largest K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 individuals and Kim holds a roughly 24% stake in the company. Previously, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could be Kakao’s “biggest crisis,” emphasizing the need for remaining company members to demonstrate its capability to operate effectively in the absence of its founder.