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 transaction 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 for him amid 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 described the arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment during a takeover attempt last year, allegedly to hinder rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun also faced indictment on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao has grown to employ over 10,000 people as of 2020. At one time, Kim was South Korea’s richest individual, with a net worth estimated at over $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested this could be Kakao’s “biggest crisis.” He emphasized the importance of the remaining team at the company demonstrating its capability to operate effectively in Kim’s absence.