A South Korean billionaire and technology 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 tech firm Kakao, has not yet faced formal charges, according to reports. An arrest warrant was issued by the Seoul Southern District Court, with prosecutors concerned he might flee the country or destroy evidence.
Kim, 58, denied the accusations, asserting during a recent staff meeting that he never authorized or supported any unlawful activities. Kakao described the arrest as “unfortunate.”
He is accused of influencing the stock of SM Entertainment amid a takeover attempt last year, purportedly to obstruct rival Hybe from acquiring the company.
SM Entertainment and Hybe are two leading companies in South Korea’s K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Additionally, last year, Kakao’s chief investment officer Bae Jae-hyun was indicted for similar stock manipulation allegations.
Founded in 2010 and headquartered in Jeju City, Kakao is significantly contributory to the tech landscape in South Korea, with Kim holding approximately a 24% stake in the company. In 2020, Kakao employed over 10,000 people and at one time, Kim was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock experienced a 5% decline on Tuesday.
According to Woochan Kim, a professor at Korea University Business School, this situation may represent “the biggest crisis” for Kakao. He emphasized the importance for the remaining leadership to demonstrate that the company can function effectively in the absence of its founder.