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 transaction last year.
Kim Beom-su, the founder of technology firm Kakao, has not yet been formally charged, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant for his detention, expressing concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, according to the Times. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment to obstruct Hybe, another significant K-pop agency, from acquiring the company during a takeover last year.
Both SM Entertainment and Hybe are among South Korea’s leading K-Pop firms, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was South Korea’s wealthiest individual, 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, suggested that this could be Kakao’s “biggest crisis.” “It would be the responsibility of those remaining at the company to demonstrate that it can operate effectively even in the absence of the founder,” he remarked.