A South Korean billionaire and tech leader was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a previous deal.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
“I assert that the allegations are false. I have never encouraged or allowed any unlawful activities,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old is accused of tampering with the stock of SM Entertainment during a takeover last year to thwart another K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among South Korea’s leading K-pop companies, representing popular groups Aespa and BTS.
Ultimately, Kakao completed its acquisition of SM Entertainment. Last year, even Kakao’s Chief Investment Officer Bae Jae-hyun faced indictment on similar stock manipulation charges.
Kim established Kakao in 2010, with its headquarters located in Jeju City. He owned around a 24% stake in the company, which employed over 10,000 individuals in 2020. At one point, Kim was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.”
“It will be up to those remaining at the company to demonstrate that it can continue to function well in the absence of its founder,” he noted.