A billionaire tech entrepreneur from South Korea was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency as part of a deal made last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued a warrant for his arrest out of concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a Kakao staff meeting last week. The company described his arrest as “unfortunate.”
Kim, who is 58 years old, is accused of distorting the stock value of SM Entertainment during a takeover bid last year in an effort to thwart 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 such as Aespa and BTS.
Ultimately, Kakao went on to acquire SM Entertainment. Last year, Kakao’s chief investment officer was also indicted for stock manipulation.
Kim founded Kakao in 2010, and he holds roughly a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a business professor at Korea University, commented that this might be Kakao’s “biggest crisis,” emphasizing the need for the company’s remaining leadership to demonstrate its ability to operate effectively without its founder.