A South Korean billionaire and tech executive was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a merger last year.
Kim Beom-su, founder of the tech firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a staff meeting at Kakao last week. The company expressed that the arrest was “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment amid a takeover effort last year, allegedly to block Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Established in 2010 and based in Jeju City, Kakao is a major player in the tech industry, with Kim holding about a 24% stake in the company. At one point, he was the wealthiest person in South Korea, with an estimated net worth exceeding $13 billion.
Following 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.” He emphasized the importance of the company’s remaining team demonstrating effective leadership in Kim’s absence.