A South Korean billionaire and tech entrepreneur was taken into custody on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure his presence, as prosecutors are concerned he might flee the country or destroy evidence.
Kim has denied the allegations, stating in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of interfering with the stock of SM Entertainment amid a takeover attempt last year to thwart a rival company, Hybe, from acquiring it.
SM Entertainment and Hybe are two leading K-Pop entities in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually secured the acquisition of SM Entertainment. Notably, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges last year.
Founded in 2010 and headquartered in Jeju City, Kakao employs over 10,000 people and Kim holds approximately a 24% stake in the company. At one time, he was considered South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock declined by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this could represent Kakao’s “biggest crisis” and emphasized the need for those remaining at the company to demonstrate its ability to operate effectively in the founder’s absence.