A billionaire South Korean tech executive 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, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant amid concerns that Kim might flee the country or destroy evidence.
In a recent company meeting, Kim denied the allegations, asserting, “I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old businessman is accused of manipulating SM Entertainment’s stock during a takeover attempt last year, aiming to block another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s leading K-Pop firms, representing popular groups such as Aespa and BTS. Kakao eventually managed to secure the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao employed over 10,000 people as of 2020, and Kim held approximately a 24% stake in the company. At one point, he was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock price fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could be Kakao’s “biggest crisis,” emphasizing the need for remaining executives to demonstrate the company can thrive without its founder.