A South Korean billionaire and tech mogul 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 tech company Kakao, has not yet been formally charged, according to the New York Times. The Seoul Southern District Court issued a warrant for his arrest, citing concerns that he may flee the country or destroy evidence.
Kim denied the allegations at a staff meeting, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to thwart its acquisition by rival K-pop agency Hybe.
Both SM Entertainment and Hybe are among the largest K-Pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Kim founded Kakao, headquartered in Jeju City, in 2010 and held around a 24% stake in the company, which employed over 10,000 individuals in 2020. At one point, he was recognized as South Korea’s richest person, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.” He emphasized the importance for the company’s remaining leadership to demonstrate effective management in Kim’s absence.