A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal that took place 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 amid concerns that he might flee the country or destroy evidence.
Kim has publicly denied the allegations, stating in a recent company meeting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover last year in an effort to thwart Hybe, another leading K-pop agency, from acquiring the company.
SM Entertainment and Hybe are two of the largest K-Pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao is a major player in the tech industry, with Kim holding approximately a 24% stake in the company. At one time, he was deemed South Korea’s richest person, boasting an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5% on Tuesday.
Korea University Business School professor Woochan Kim commented that this situation might represent Kakao’s “biggest crisis,” emphasizing that it will be crucial for remaining leadership to demonstrate that the company can operate effectively in the founder’s absence.