A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly engaging in stock manipulation involving a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant for him amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim stated during a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover bid last year in an effort to hinder another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two leading K-pop companies in South Korea, representing popular groups such as Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people and Kim holds about a 24% stake in the company. At one time, he was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock price dropped by 5%.
Woochan Kim, a professor at Korea University Business School, indicated this incident could represent Kakao’s “biggest crisis.” He emphasized that it would be up to the remaining company leadership to demonstrate that the organization can function effectively without its founder.