A South Korean billionaire and technology tycoon 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 Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant over concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated during a staff meeting at Kakao last week. The company described his arrest as “unfortunate.”
The 58-year-old businessman is accused of influencing the stock of SM Entertainment during a takeover bid last year to thwart Hybe, another major K-pop company, from acquiring it.
SM Entertainment and Hybe are leading figures in the South Korean K-pop industry, representing popular groups Aespa and BTS, respectively. Kakao ultimately secured the purchase of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao, where Kim holds approximately a 24% ownership stake, employed over 10,000 people as of 2020. At one point, Kim was South Korea’s wealthiest individual, boasting an estimated net worth exceeding $13 billion.
Following the announcement of Kim’s arrest, Kakao’s stock saw a decline of 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 that it can function effectively without the founder,” he added.