A South Korean billionaire and technology entrepreneur was taken into custody on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. Authorities at the Seoul Southern District Court issued an arrest warrant over concerns that he might flee the country or destroy potential evidence.
Kim denied the allegations during a recent meeting with his staff at Kakao, asserting that he has never participated in or permitted any illegal activities. The company described his arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of influencing the stock of SM Entertainment during a takeover last year to hinder Hybe, another significant K-pop agency, from acquiring it.
SM Entertainment and Hybe are two leading K-pop companies in South Korea, representing notable groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded by Kim in 2010 and based in Jeju City, Kakao employed over 10,000 people as of 2020. At one point, he was the wealthiest person in South Korea, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock price dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s most significant crisis. He emphasized the importance of the company’s management demonstrating its functionality despite the absence of its founder.