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 last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for Kim, citing 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 staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover to obstruct a rival acquisition by Hybe, another major K-pop agency. SM Entertainment and Hybe are among the largest K-pop companies in the country, managing groups such as Aespa and BTS, respectively.
Kakao eventually completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao employs more than 10,000 people and Kim holds a 24% stake in the company. At one point, Kim was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock experienced a 5% decline on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this may represent Kakao’s “biggest crisis.” He emphasized that it would be crucial for the remaining leaders at the company to demonstrate effective management in the absence of its founder.