A South Korean billionaire and technology leader was arrested on Tuesday for allegedly inflating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant to secure his custody, as prosecutors expressed concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company described his arrest as “unfortunate.”
Kim, 58, is accused of manipulating the stock of SM Entertainment during a takeover bid last year, in an effort to thwart rival K-pop agency Hybe from acquiring it.
Both SM Entertainment and Hybe are major players in the South Korean K-pop industry, representing popular groups Aespa and BTS respectively.
Kakao ultimately succeeded in acquiring SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao had over 10,000 employees as of 2020. Kim was once the wealthiest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock saw a decline of 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested this could be the “biggest crisis” for Kakao. “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,” he commented.