A billionaire South Korean tech entrepreneur was apprehended on Tuesday for allegedly engaging in stock price manipulation concerning a prominent K-pop agency during a takeover last year.
Kim Beom-su, the founder of Kakao Corporation, has not yet been formally charged according to reports. The Seoul Southern District Court authorized his arrest due to concerns that he might flee the country or destroy evidence.
In a recent staff meeting, 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 manipulating the stock of SM Entertainment amid a takeover attempt to block Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-pop entities, representing popular groups Aespa and BTS, respectively.
Kakao later acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted for similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao has seen significant growth, with Kim holding approximately a 24% stake in the company, which employed over 10,000 staff in 2020. At one point, Kim was recognized as South Korea’s wealthiest individual, boasting a net worth exceeding $13 billion.
Following news of his arrest, shares in Kakao fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested that this could mark Kakao’s “biggest crisis,” emphasizing that it is now up to the remaining leadership to demonstrate the company’s ability to operate successfully without its founder.