A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock prices of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant, citing 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 in a meeting with Kakao staff last week. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to prevent rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing the popular groups Aespa and BTS, respectively.
Kakao eventually managed to acquire SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim started Kakao, which is headquartered in Jeju City, in 2010. He owns approximately a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one point, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.”
“It will be up to the remaining employees to demonstrate that the company can function effectively even in the absence of its founder,” he noted.