A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent 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 for him due to concerns that he may attempt to flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated in a staff meeting last week, while Kakao described the arrest as “unfortunate.”
The 58-year-old businessman is accused of manipulating the stock of SM Entertainment during last year’s takeover to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular groups 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, which is based in Jeju City, in 2010. As of 2020, the company employed over 10,000 people, and at one time, Kim was South Korea’s richest individual, 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, remarked that this situation could represent Kakao’s “biggest crisis.”
“It will be up to those who remain at the company to demonstrate that it can operate successfully even in the absence of the founder,” he noted.