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 been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him due to concerns that he might flee the country or destroy evidence.
Kim has denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a meeting with Kakao staff last week. The company has referred to the arrest as “unfortunate.”
The 58-year-old businessman is accused of influencing the stock of SM Entertainment amid a takeover effort to thwart Hybe, another leading K-pop agency, from acquiring the company. SM Entertainment and Hybe are two of the largest K-pop firms in South Korea, representing popular artists such as Aespa and BTS, respectively.
Kakao eventually gained control of SM Entertainment. Last year, Bae Jae-hyun, the chief investment officer of Kakao, was also indicted for stock manipulation.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one point, he was South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. A professor at Korea University Business School remarked that this incident could represent Kakao’s “biggest crisis,” suggesting that it would be crucial for remaining company leaders to demonstrate that the firm can operate effectively without its founder.