A South Korean billionaire and technology mogul 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 firm Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court as prosecutors expressed concerns 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 has described the arrest as “unfortunate.”
Kim, 58, is accused of stock manipulation involving SM Entertainment during a takeover attempt last year, aimed at thwarting another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, managing popular groups like Aespa and BTS.
Kakao eventually completed the acquisition of SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao, which Kim holds about a 24% stake in, employed over 10,000 people as of 2020. At one time, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing the importance for the remaining team to demonstrate the company’s ability to operate effectively without its founder.