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 deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him amid concerns that he might flee the country or destroy evidence.
Kim denied the allegations, stating in a meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao referred to his arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment during a takeover attempt last year to hinder a rival acquisition by Hybe, another prominent K-pop agency.
SM Entertainment and Hybe are considered two of the largest K-Pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately went on to acquire SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges.
Kim, who founded Kakao in 2010 and holds approximately a 24% stake in the company, saw it grow to employ over 10,000 people by 2020. At one point, he was South Korea’s richest individual, with an estimated 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, noted that this situation could represent Kakao’s “biggest crisis,” and emphasized that it would be crucial for the remaining team to demonstrate the company’s resilience without the founder.