A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency as part of a deal last year.
Kim Beom-su, the founder of technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant over concerns that he might flee the country or destroy evidence.
In response to the allegations, Kim stated in a company meeting last week, “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 the stock of SM Entertainment during a takeover bid last year, allegedly to thwart another K-pop agency, Hybe, from acquiring the firm.
SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Kim founded Kakao in 2010, and he owned about a 24% stake in the company, which employed over 10,000 people as of 2020. He has previously held the title of South Korea’s richest person, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock experienced a 5% decline on Tuesday.
Woochan Kim, a professor at Korea University Business School, indicated that this situation could represent Kakao’s “biggest crisis.” He remarked, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”