A billionaire and tech entrepreneur from South Korea was taken into custody on Tuesday, accused of manipulating the stock prices 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 granted an arrest warrant amid concerns from prosecutors that he might flee the country or tamper with evidence.
In a recent staff meeting at Kakao, Kim denied the allegations, stating, “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 Kim is suspected of manipulating the stock of SM Entertainment as part of a scheme to thwart another major K-pop agency, Hybe, from acquiring it. Both SM Entertainment and Hybe are among the largest K-pop companies in South Korea, managing popular groups Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment. Additionally, the company’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges last year.
Founded in 2010 and based in Jeju City, Kakao boasts a workforce of over 10,000 people as of 2020. At one point, Kim was considered South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion. Following the news of his arrest, Kakao’s stock dropped by 5%.
Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis” and remarked that it will be up to the remaining leadership to prove the company can operate effectively in Kim’s absence.