A South Korean billionaire and tech mogul was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology company Kakao, has not been formally charged, according to the New York Times. The Seoul Southern District Court issued an arrest warrant for him, citing 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 said 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 last year in an effort to prevent Hybe, another major K-pop agency, from acquiring it. SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing groups like Aespa and BTS respectively.
Kakao eventually acquired SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on stock manipulation charges.
Kim founded Kakao, headquartered in Jeju City, in 2010. The company, in which Kim holds about a 24% stake, employed more than 10,000 people as of 2020. At one point, Kim was South Korea’s richest person, with an estimated net worth of over $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, told the Times that this might be Kakao’s “biggest crisis.”
“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 said.