A South Korean billionaire and technology entrepreneur was arrested 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 tech company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant out of concern that he might flee the country or tamper with 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 the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment amid a takeover last year in an effort to block another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, home to popular groups Aespa and BTS, respectively.
Kakao ultimately took over SM Entertainment. In the previous year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao employed over 10,000 people as of 2020, with Kim holding a 24% stake in the company. He was at one time recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, indicated that this could be Kakao’s “biggest crisis.” He emphasized that it will now be up to the remaining team at Kakao to demonstrate that the company can thrive even in the absence of its founder.