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 deal 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 Kim might 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 at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old businessman faces accusations of manipulating the stock of SM Entertainment during a takeover last year to thwart a bid from Hybe, another leading K-pop agency.
SM Entertainment and Hybe represent two of South Korea’s largest K-Pop companies, with Aespa and BTS under their wings, respectively.
Kakao successfully acquired SM Entertainment, while last year, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges.
Kim founded Kakao in 2010 and held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was South Korea’s richest individual, with a 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, indicated that this could represent Kakao’s “biggest crisis” and emphasized the need for those remaining at the company to demonstrate its ability to thrive without its founder.