A South Korean billionaire and 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 tech giant Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or conceal evidence.
In a staff meeting at Kakao last week, Kim denied the allegations, stating, “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 during a takeover last year to thwart Hybe, another significant K-pop agency, from acquiring it.
Both SM Entertainment and Hybe are major players in the K-Pop industry, representing popular groups like Aespa and BTS.
Kakao eventually acquired SM Entertainment. Additionally, Kakao’s chief investment officer Bae Jae-hyun was indicted last year on similar stock manipulation charges.
Kim founded Kakao in 2010 and holds approximately a 24% stake in the company, which had over 10,000 employees as of 2020. At one time, he was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the arrest news, Kakao’s stock dropped 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis.” He suggested that it would now be up to the remaining leadership to demonstrate the company can thrive without its founder.