A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a major 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 amid concerns that he might flee the country or tamper with evidence.
Kim denied the allegations, stating during a staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao publicly described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover bid last year to thwart Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe are two of the largest K-Pop companies in South Korea, representing popular groups like Aespa and BTS, respectively.
Kakao eventually succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao employs over 10,000 people and has seen Kim retain approximately a 24% stake in the company. At one time, he was recognized as South Korea’s richest individual, with an estimated net worth surpassing $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. A professor at Korea University Business School remarked that this could be Kakao’s “biggest crisis,” adding that it would be up to those who remain at the company to demonstrate that it can operate effectively without its founder.