A South Korean billionaire and technology executive was arrested on Tuesday for allegedly manipulating the stock price of a well-known K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been officially charged, according to reports. A Seoul court issued an arrest warrant to ensure his presence, amid concerns that he might attempt to flee the country or destroy evidence related to the case.
“I firmly deny the allegations. I have never directed or allowed any illegal actions,” Kim stated during a staff meeting at Kakao last week. The company deemed the arrest “unfortunate.”
The 58-year-old businessman is accused of manipulating the stock of SM Entertainment during a takeover bid last year, in an effort to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two of the largest K-Pop companies in South Korea, representing well-known groups Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a major player in the tech industry, with Kim holding a roughly 24% ownership stake. At one point, he was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5%. A professor from Korea University Business School remarked that this could represent Kakao’s “biggest crisis,” emphasizing that it will be crucial for the remaining leadership to demonstrate the company can continue to operate effectively without its founder.