A South Korean billionaire and tech magnate 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 been formally charged, according to the New York Times. The Seoul Southern District Court issued an arrest warrant due to concerns that he might attempt to flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. These allegations are not true,” Kim stated in a Kakao staff meeting last week. The company described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to thwart Hybe, another leading K-pop agency, from acquiring it.
Both SM Entertainment and Hybe are major players in the K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually took over SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun faced similar stock manipulation charges.
Kim established the company in 2010, with its headquarters in Jeju City. He held approximately a 24% stake in Kakao, which employed over 10,000 people as of 2020. At one time, he was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.” He emphasized the importance of the team remaining to demonstrate that the company can function effectively without its founder.