Brian Kim, the billionaire founder of Kakao, South Korea’s leading Internet company, has been arrested in connection with alleged stock manipulation during a 2023 bidding war with rival HYBE over SM Entertainment, the home of BTS.

Regulators accused Kakao executives of buying â‚©240b ($173m) of SM shares to undermine HYBE’s offer for SM, leading to Kakao’s takeover of the K-pop agency.

Seoul’s Southern District Court issued the arrest warrant on Tuesday, citing concerns about destruction of evidence and flight risk.

Kakao Chief Investment Officer Bae Jae-hyun is standing trial for his involvement in the SM acquisition, but he has denied involvement in any illegal activities connected to the deal, as has Kim.

Kim, whose legal name is Kim Beom-su, is one of South Korea’s few self-made billionaires, having amassed his fortune after creating Kakao’s messenger app in 2010. His company’s businesses now range from social media and Internet portals to online banking, shopping and gaming. Kim has become the country's richest person, backed by stock gains this year, according to the Bloomberg Billionaires Index.

Kim’s legal trouble comes as Kakao is accelerating investments in AI and expanding its overseas presence with digital comics known as webtoons.

In a statement, Kakao expressed regret over Kim’s arrest and said it would do its best to minimize any leadership vacuum.

The company’s stock dropped 4.6% on Tuesday after news broke of Kim’s arrest. Its share price has fallen by 77% since hitting a record high in 2021.