A South Korean billionaire and tech entrepreneur was taken into custody on Tuesday for allegedly manipulating the stock price of a prominent K-pop company during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant over concerns that he might flee the country or destroy evidence.
Kim denied the allegations, stating during a staff meeting at Kakao 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 influencing the stock of SM Entertainment during a takeover attempt last year to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-pop firms, representing popular artists like Aespa and BTS, respectively. Kakao eventually purchased SM Entertainment. Additionally, Kakao’s chief investment officer Bae Jae-hyun was indicted last year on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao was led by Kim, who held about a 24% stake in the company and employed over 10,000 people as of 2020. At one point, he was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this situation could be Kakao’s “biggest crisis.” He added, “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.”