A South Korean billionaire and tech 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 the technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court authorized an arrest warrant due to concerns that he might flee the country or destroy evidence.
Kim has denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent staff meeting at Kakao. The company described the arrest as “unfortunate.”
The 58-year-old tycoon is accused of orchestrating stock manipulation involving SM Entertainment as part of a strategy to thwart Hybe, another leading K-pop agency, from taking over the company.
Both SM Entertainment and Hybe are major players in South Korea’s K-pop industry, representing popular groups Aespa and BTS, respectively. Kakao eventually secured the acquisition of SM Entertainment. Additionally, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges last year.
Founded in 2010 and headquartered in Jeju City, Kakao employs over 10,000 people, with Kim holding approximately a 24% ownership stake in the company. At one time, he was recognized as South Korea’s richest individual, boasting an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday. A professor from Korea University Business School remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for remaining leadership to demonstrate that the company can operate effectively in Kim’s absence.