A billionaire South Korean 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 reports. The Seoul Southern District Court issued an arrest warrant for him amid concerns that he may flee the country or destroy evidence.
Kim denied the allegations, stating in a recent meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company called the arrest an “unfortunate” event.
The 58-year-old businessman is accused of manipulating SM Entertainment’s stock during a takeover attempt last year in a bid to block rival major K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-pop firms, representing popular groups Aespa and BTS, respectively. Ultimately, Kakao went on to acquire SM Entertainment. In addition, Kakao’s chief investment officer Bae Jae-hyun was also indicted last year on charges related to stock manipulation.
Kim founded Kakao in 2010, with the company’s headquarters located in Jeju City. He held about a 24% stake in the firm, which employed over 10,000 individuals as of 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 fell by 5% on Tuesday. A professor at Korea University Business School remarked that this could represent Kakao’s “biggest crisis,” emphasizing that it would be up to the remaining leadership to demonstrate the company can succeed without its founder.