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 deal last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant, predicting that he might attempt to flee the country or destroy evidence.
Kim denied the allegations, stating during a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao responded to the arrest by calling it “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover last year to prevent competitor Hybe from acquiring it. SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually purchased SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a significant player in the technology sector, with Kim holding a 24% stake as of 2020. At one point, Kim was South Korea’s richest individual, boasting an estimated net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock experienced a 5% decline. Woochan Kim, a business professor at Korea University, suggested that this situation could represent Kakao’s “biggest crisis.” He emphasized that it will be crucial for the remaining leadership to demonstrate that the company can continue to operate effectively without its founder.