A prominent South Korean billionaire and tech executive was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant to ensure his custody, amid concerns that he might attempt to flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a meeting with Kakao staff last week. The company referred to the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover last year, as part of a strategy to thwart Hybe, another major player in the K-pop industry, from acquiring the agency.
SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular groups such as Aespa and BTS.
Kakao ultimately acquired SM Entertainment, and last year, Bae Jae-hyun, the chief investment officer at Kakao, was also indicted on charges of stock manipulation.
Kim, who founded the company in 2010 and still holds a 24% stake, saw Kakao grow to employ over 10,000 people by 2020. He was once considered 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, remarked that this could represent Kakao’s “biggest crisis,” emphasizing the need for remaining executives to demonstrate that the company can thrive in the absence of its founder.