A South Korean billionaire and technology leader 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 yet been formally charged, according to the New York Times. The Seoul Southern District Court issued an arrest warrant over concerns that he might flee the country or destroy evidence.
In response to the allegations, Kim stated during a Kakao staff meeting last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has labeled the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt 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 Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment after the allegations surfaced. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges related to stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao is a major player in the tech industry, employing over 10,000 people as of 2020. At one point, Kim was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing that it will be essential for the remaining leadership to demonstrate that the company can thrive without its founder.