A South Korean billionaire and technology leader was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency in connection with a deal from the previous year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. An arrest warrant issued by the Seoul Southern District Court was executed amid concerns from prosecutors that he might evade justice 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.”
At 58 years old, Kim is accused of influencing the stock of SM Entertainment amid a takeover bid last year, as part of an effort to thwart Hybe, another leading K-pop agency, from acquiring the company.
SM Entertainment and Hybe are among the largest K-pop firms in South Korea, managing popular groups like Aespa and BTS.
Kakao has since acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao employs more than 10,000 people and Kim holds approximately a 24% stake in the company. He previously ranked as South Korea’s wealthiest individual, with an estimated fortune exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested this could represent Kakao’s “biggest crisis,” emphasizing that it will be up to remaining executives to demonstrate that the company can thrive without its founder.