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 amid a deal last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant as prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim stated during a company meeting last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has described the arrest as “unfortunate.”
At 58 years old, Kim faces accusations of manipulating the stock of SM Entertainment during a takeover last year to thwart rival K-pop agency Hybe’s acquisition attempt. SM Entertainment and Hybe represent two of South Korea’s largest K-pop entities, managing popular groups like Aespa and BTS.
Kakao eventually went on to acquire SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, faced criminal charges related to stock manipulation.
Founded by Kim in 2010, Kakao is based in Jeju City and had over 10,000 employees in 2020. At one time, he was recognized as South Korea’s wealthiest individual, with an estimated fortune exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, indicated that this situation could present Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s viability in Kim’s absence.