A South Korean billionaire and tech leader 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 technology company Kakao, has not been formally charged. The Seoul Southern District Court issued an arrest warrant for him amid concerns 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 in opposition to a takeover by Hybe, another major player in the K-pop industry. SM Entertainment and Hybe represent significant acts such as Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on related stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao employs over 10,000 people as of 2020. Kim was once South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, noted that this situation could represent Kakao’s “biggest crisis.”
“It will be up to those who remain at the company to demonstrate that it can continue to operate effectively in the founder’s absence,” he commented.