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 deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued a warrant for his arrest due to concerns that he might flee the country or destroy evidence.
In a recent meeting with staff at Kakao, Kim stated, “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 the stock of SM Entertainment in connection with 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 Aespa and BTS, respectively.
Kakao eventually purchased SM Entertainment, and last year, Kakao’s chief investment officer was indicted on similar stock manipulation charges.
Kim established Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. He was previously considered South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock experienced a 5% decline on Tuesday.
A professor at Korea University Business School remarked that this situation might represent Kakao’s “biggest crisis,” emphasizing the need for the company’s remaining leadership to demonstrate that it can operate effectively without its founder.