A South Korean billionaire and tech entrepreneur was taken into custody on Tuesday for allegedly manipulating the stock of a prominent K-pop agency during a deal that took place last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence.
Kim has denied the allegations, asserting during a recent staff meeting at Kakao that he has never engaged in or endorsed any illegal activities. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover to thwart another major K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are leading players in the South Korean K-pop industry, representing popular groups like Aespa and BTS.
Kakao eventually secured the acquisition of SM Entertainment. In the past year, Kakao’s chief investment officer Bae Jae-hyun faced similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao had more than 10,000 employees in 2020, and Kim held about a 24% stake in the company. At one point, he was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock fell by 5% on Tuesday. An academic from Korea University Business School remarked that this situation could represent Kakao’s “biggest crisis,” highlighting the need for the remaining leadership to demonstrate that the company can maintain its operations effectively without its founder.