A South Korean billionaire and technology entrepreneur 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 the tech giant Kakao, has yet to be formally charged, according to reports. The Seoul Southern District Court has approved an arrest warrant for Kim, amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim has denied the allegations, stating in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of artificially inflating the stock of SM Entertainment during a takeover bid last year, allegedly to hinder another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two leading firms in South Korea’s K-Pop industry, representing popular groups such as Aespa and BTS, respectively.
Kakao eventually purchased SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Kim founded Kakao in 2010, and he held a 24% stake in the company, which had over 10,000 employees in 2020. At one point, he was considered South Korea’s wealthiest 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 professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis.” He emphasized the need for the company’s remaining leadership to demonstrate its ability to operate effectively without its founder.