A South Korean billionaire and tech entrepreneur was taken into custody on Tuesday over allegations of stock price manipulation involving 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. The Seoul Southern District Court authorized his arrest amid concerns from prosecutors that he might attempt to flee the country or destroy evidence.
Kim denied the accusations during a recent staff meeting, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has described the situation as “unfortunate.”
The 58-year-old is accused of interfering with the stock of SM Entertainment to hinder the acquisition by Hybe, another significant player in the K-pop industry. SM Entertainment and Hybe represent two of South Korea’s largest K-pop companies, managing groups such as Aespa and BTS.
Kakao eventually completed its acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted for similar stock manipulation offenses.
Founded in 2010 and headquartered in Jeju City, Kakao is partially owned by Kim, who held approximately 24% of its shares and employed over 10,000 people as of 2020. At one point, he was the wealthiest individual in South Korea, with a net worth surpassing $13 billion.
Following the news of Kim’s arrest, Kakao stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, indicated this might represent a significant challenge for Kakao, stating, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”