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 takeover last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence, according to the New York Times.
Kim has denied the accusations, stating in a staff meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating SM Entertainment’s stock to hinder a competing acquisition attempt by another major K-pop agency, Hybe. SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular acts Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Previously, last year, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges.
Kim founded the company in 2010, and he retains approximately a 24% ownership stake in it. Kakao employed over 10,000 people in 2020, and at one time, Kim was recognized as South Korea’s wealthiest individual, with a 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, commented that this could represent Kakao’s “biggest crisis,” emphasizing that it would be essential for the remaining leadership to demonstrate the company’s viability in the absence of its founder.