A South Korean billionaire and tech entrepreneur 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 issued an arrest warrant, citing concerns that he may flee the country 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 expressed regret over the arrest, calling it “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to obstruct Hybe, another major K-pop agency, from acquiring it. SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing artists like Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010 and holds approximately a 24% stake in the company, which employed over 10,000 people as of 2020. He was once considered South Korea’s richest person, with an estimated 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, noted that this event could represent “Kakao’s biggest crisis.”
“It will be the responsibility of those remaining at the company to demonstrate that it can operate effectively even in the absence of its founder,” he added.