A South Korean billionaire and tech executive was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a takeover deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has yet to face formal charges according to reports. An arrest warrant was issued by the Seoul Southern District Court over concerns that he might flee the country or destroy evidence.
Kim has publicly denied the allegations, stating in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of interfering with the stock of SM Entertainment in a bid to prevent another major K-pop agency, Hybe, from acquiring it. Both SM Entertainment and Hybe are leading players in the South Korean K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao ultimately completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people and Kim holds approximately a 24% stake in the company. At one time, he was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, shares of Kakao fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent “Kakao’s biggest crisis,” noting that it would now be imperative for company leadership to demonstrate effective management in Kim’s absence.