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 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 a warrant for his arrest due to concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company referred to the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment amid a takeover attempt last year to inhibit another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing popular acts such as Aespa and BTS.
Kakao eventually secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a significant player in the technology sector, with Kim holding approximately a 24% stake. The company had over 10,000 employees in 2020, and Kim was once recognized as South Korea’s richest individual, boasting a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock price dropped by 5%.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s most significant crisis.
“It will be the responsibility of those who remain at the company to demonstrate that it can operate effectively even in the absence of its founder,” he noted.