A South Korean billionaire and tech entrepreneur was taken into custody 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 firm Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court issued an arrest warrant due to 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 company meeting last week. Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover last year to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups like Aespa and BTS, respectively.
Ultimately, Kakao acquired a stake in SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010 and maintains a 24% ownership stake in the company, which employed over 10,000 people as of 2020. At one time, he was considered South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis,” emphasizing the importance for remaining executives to demonstrate that the company can operate successfully without its founder.