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 firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, emphasizing that the allegations are false. Kakao called the arrest “unfortunate.”
The 58-year-old businessman is accused of stock manipulation involving SM Entertainment during a takeover attempt last year, allegedly to thwart a bid from Hybe, another major player in the K-pop industry.
SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular groups Aespa and BTS respectively.
Kakao eventually succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao had over 10,000 employees as of 2020 and once made Kim the richest person in South Korea, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday. A professor at Korea University Business School remarked that this could be Kakao’s “biggest crisis.” He suggested that it will be crucial for the remaining leadership to demonstrate the company’s ability to operate effectively in Kim’s absence.