A South Korean billionaire and tech leader 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 tech giant Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns from prosecutors that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
Kim, who is 58 years old, is accused of illegally manipulating the stock of SM Entertainment amid its takeover last year in an effort to hinder a rival agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing popular groups Aespa and BTS respectively.
Ultimately, Kakao secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, and as of 2020, the company employed over 10,000 people. He held approximately a 24% stake in the company and was once the wealthiest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, noted that this could represent Kakao’s “biggest crisis.” He emphasized that it will be up to the remaining leadership to demonstrate that the company can function effectively in the absence of its founder.