A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price 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 the New York Times. The Seoul Southern District Court issued an arrest warrant to ensure his custody, as prosecutors expressed concerns about the possibility of him fleeing the country or destroying evidence.
In a recent staff meeting at Kakao, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to thwart Hybe, another major K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, with Aespa and BTS under their respective banners.
Kakao eventually completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on stock manipulation charges.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one time, he was considered South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock plummeted by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could be Kakao’s “biggest crisis,” emphasizing the need for those remaining in the company to demonstrate its ability to function effectively in Kim’s absence.