A prominent billionaire and tech entrepreneur from South Korea was taken into custody on Tuesday for purportedly manipulating the stock prices of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet faced formal charges, according to the New York Times. The Seoul Southern District Court has issued a warrant for his arrest due to concerns from prosecutors about the possibility of him fleeing the country or destroying evidence.
Kim denied the allegations during a recent staff meeting, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has labeled the arrest as “unfortunate.”
The 58-year-old businessman is accused of influencing the stock of SM Entertainment during a takeover bid last year, as part of a strategy aimed at blocking rival Hybe, another notable K-pop agency, from acquiring the company.
SM Entertainment and Hybe are among the largest K-Pop entities in South Korea, representing popular acts like Aespa and BTS, respectively. Kakao ultimately succeeded in acquiring SM Entertainment, although last year, the firm’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is led by Kim, who holds approximately a 24% stake in the company. As of 2020, it employed over 10,000 people and at one time, Kim was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a business professor at Korea University, remarked on the situation, suggesting that this could represent Kakao’s “biggest crisis.” He emphasized the importance for the remaining leadership at the company to demonstrate its capability to operate effectively in the absence of its founder.