A billionaire South Korean tech executive was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal that took place 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 an arrest warrant, expressing concerns that Kim might flee the country or destroy evidence.
Kim denied the allegations during a staff meeting at Kakao last week, 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 businessman is accused of engaging in stock manipulation related to SM Entertainment during a takeover bid, allegedly to obstruct Hybe, another leading K-pop agency, from acquiring the company.
Both SM Entertainment and Hybe are major players in South Korea’s K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao saw its workforce exceed 10,000 employees by 2020. At one time, Kim was the richest person in South Korea, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. An academic at Korea University Business School indicated that this situation could be Kakao’s “biggest crisis,” stressing that it would be crucial for those remaining at the company to prove its ability to operate effectively in the founder’s absence.