A South Korean billionaire and tech entrepreneur, Kim Beom-su, was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
The founder of the technology firm Kakao, Kim has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court amid concerns that he might flee the country or destroy evidence related to the case.
Kim has strongly denied the allegations, stating in a recent company meeting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the situation as “unfortunate.”
Kim, aged 58, is accused of manipulating the stock of SM Entertainment during a takeover bid last year, allegedly to hinder rival agency Hybe from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups like Aespa and BTS.
Kakao eventually acquired SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges.
Founded in 2010 in Jeju City, Kakao employs over 10,000 people, and Kim holds around a 24% stake in the company. At one point, he was the richest individual in South Korea, with a fortune exceeding $13 billion.
In response to the arrest announcement, 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,” suggesting it will be crucial for the remaining leadership to demonstrate the company’s resilience in the absence of its founder.