A South Korean billionaire and tech leader 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 the technology firm Kakao, has not yet been formally charged according to reports. The Seoul Southern District Court has issued an arrest warrant for him due to concerns that he might flee the country or destroy evidence.
“I firmly deny these allegations. I have never directed or approved any illegal actions,” Kim stated in a meeting at Kakao prior to his arrest. The company described the situation as “unfortunate.”
Kim, 58, faces accusations of tampering with the stock of SM Entertainment during a takeover bid last year, as part of an effort to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Kim founded Kakao in 2010, with its headquarters in Jeju City. He holds roughly a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked this could be Kakao’s “biggest crisis.”
“It will be up to those remaining at the company to demonstrate that it can operate effectively even in the absence of the founder,” he noted.