A South Korean billionaire and tech leader was taken into custody on Tuesday over allegations of stock price manipulation involving a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court approved an arrest warrant out of concern that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of attempting to manipulate the stock of SM Entertainment during a takeover last year to prevent Hybe, another major K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of the largest companies in South Korea’s K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually took over SM Entertainment. Last year, Kakao’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 a significant player in South Korea’s tech industry, where Kim holds a roughly 24% stake. The company employed over 10,000 people in 2020, and at one time, Kim was the country’s richest person, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock 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 the remaining staff to demonstrate the company’s ability to thrive without its founder.