A South Korean billionaire and 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 the technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant out of concern that Kim might flee the country or destroy evidence.
In a recent staff meeting, Kim stated, “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 inflating the stock value of SM Entertainment amid a takeover bid last year, allegedly to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually took over SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Kim, who founded Kakao in 2010 and holds about a 24% stake in the company, saw Kakao grow to employ more than 10,000 people by 2020. At one point, he was South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” suggesting that it will be crucial for the remaining management to demonstrate that the company can thrive without its founder.