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 tech firm Kakao, has not yet been formally charged, according to the New York Times. The Seoul Southern District Court issued an arrest warrant, fearing he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated during a staff meeting at Kakao 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 bid last year to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two of the leading K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately secured the acquisition of SM Entertainment. In the previous year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Kim founded Kakao in 2010, which is based in Jeju City. He held approximately a 24% stake in the company, which had over 10,000 employees by 2020. At one time, he was the richest individual in South Korea, 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 event could represent Kakao’s “biggest crisis.”
“It will be up to those who remain at the company to demonstrate that it can function effectively even in the founder’s absence,” he noted.