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 deal last year.
Kim Beom-su, the founder of technology company Kakao, has not been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him, citing concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has described the arrest as “unfortunate.”
The 58-year-old faces accusations of manipulating the stock of SM Entertainment amid a takeover attempt last year, intending to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-Pop companies, managing artists like Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Kim established Kakao in 2010, and as of 2020, he owned about 24% of the company, which employed over 10,000 people. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated fortune exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing the need for the remaining executives to demonstrate that the company can thrive without its founder.