A South Korean billionaire and tech executive 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. The Seoul Southern District Court issued an arrest warrant for him amid concerns that he might flee the country or destroy evidence.
In response to the arrest, Kim stated during a Kakao staff meeting last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao called the news of his arrest “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment as part of a plan to hinder another major K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing popular groups Aespa and BTS respectively.
Kakao eventually became the owner of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges related to stock manipulation.
Having founded Kakao in 2010 and holding approximately a 24% stake in the company, Kim saw the firm grow to employ over 10,000 people by 2020. At one time, he was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing that it would now be up to the remaining leadership to demonstrate that the company can continue to thrive without its founder.