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 transaction 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 for him over concerns that he might flee the country or destroy evidence related to the case.
Kim, 58, has denied the allegations, stating in a Kakao staff meeting last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company expressed regret over the arrest, calling it “unfortunate.”
He is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to block a bid from Hybe, another large K-pop agency.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular acts like Aespa and BTS.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people and has Kim maintaining a 24% ownership stake in the company. At one time, Kim was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price dropped by 5% on Tuesday. Experts believe this incident may pose a significant crisis for the company. Woochan Kim, a professor at Korea University Business School, noted that it will be crucial for Kakao’s remaining leadership to demonstrate the company’s stability in Kim’s absence.