A South Korean billionaire and tech entrepreneur was taken into custody on Tuesday, facing accusations of manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court, with prosecutors expressing concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a meeting with Kakao staff last week. The company described the arrest as “unfortunate.”
The 58-year-old is alleged to have manipulated the stock of SM Entertainment amid a takeover attempt last year, in a bid to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among the largest K-Pop companies in the country, overseeing popular groups such as Aespa and BTS.
Eventually, Kakao completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun faced charges of stock manipulation as well.
Founded in 2010 and based in Jeju City, Kakao saw Kim hold approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was considered South Korea’s wealthiest individual, with a net worth surpassing $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent “Kakao’s biggest crisis.”
“It will be up to those who remain at the company to demonstrate its ability to operate effectively without the founder,” he added.