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 Kakao, has not been formally charged yet, according to reports. The Seoul Southern District Court issued an arrest warrant for him due to concerns that he might flee the country or destroy evidence.
Kim has denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent staff meeting at Kakao. The company expressed that the arrest is “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment in connection with a takeover bid last year, reportedly to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are among South Korea’s leading K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, but last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on stock manipulation charges.
Founded in Jeju City in 2010, Kakao employs over 10,000 people as of 2020, and Kim was previously the richest individual in South Korea, with a net worth surpassing $13 billion. Following the news of his arrest, Kakao’s stock fell by 5%.
Woochan Kim, a business professor at Korea University, remarked that this situation could be Kakao’s “biggest crisis,” suggesting that it would be crucial for the remaining leadership to demonstrate that the company can continue to thrive without its founder.