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 tech company Kakao, has not yet been officially charged, according to reports. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company expressed that the arrest is “unfortunate.”
At 58 years old, Kim is accused of manipulating stocks of SM Entertainment during a takeover bid to deter another major K-pop agency, Hybe, from securing the acquisition.
SM Entertainment and Hybe are two of South Korea’s largest K-pop agencies, with Aespa and BTS under their respective banners.
Kakao eventually completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is majorly owned by Kim, who held approximately a 24% stake in the company, which employed over 10,000 individuals in 2020. At one point, he was South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
In response to the news of his arrest, Kakao’s stock fell 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.” He emphasized that it is now up to the remaining management to demonstrate the company can operate effectively without its founder.