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 Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for his detention due to concerns that he might flee the country or destroy evidence.
Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts” during a recent staff meeting at Kakao. The company expressed that the arrest is “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment amidst a takeover bid last year to thwart efforts by Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately took over SM Entertainment. Additionally, Kakao’s chief investment officer, Bae Jae-hyun, was indicted last year on similar stock manipulation charges.
Kim founded Kakao, headquartered in Jeju City, in 2010. He owned approximately 24% of the company, which employed over 10,000 people in 2020. At one point, he was recognized as South Korea’s richest individual, boasting an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock experienced a 5% decline on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested that this incident could represent Kakao’s “biggest crisis.” He noted, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”