A South Korean billionaire and tech leader was taken into custody on Tuesday for allegedly manipulating the stock price of a significant K-pop agency during a deal last year.
Kim Beom-su, the founder of technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court approved an arrest warrant out of concern that he might attempt to flee the country or destroy evidence.
Kim denied the allegations during a staff meeting at Kakao last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao labeled the arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment during a takeover bid last year, supposedly to thwart Hybe, another major K-pop agency, from acquiring the company.
SM Entertainment and Hybe are two leading K-Pop organizations in South Korea, representing popular acts Aespa and BTS, respectively.
Kakao eventually completed its acquisition of SM Entertainment. Additionally, last year, Kakao’s chief investment officer Bae Jae-hyun faced indictment on stock manipulation charges.
Established in 2010 and headquartered in Jeju City, Kakao, in which Kim holds approximately a 24% stake, employed over 10,000 people as of 2020. At one time, Kim was considered South Korea’s wealthiest individual, with an estimated 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 could represent Kakao’s “biggest crisis.” He emphasized that it will be essential for the remaining team members to demonstrate the company’s ability to operate effectively in the absence of its founder.