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 faced formal charges, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant due to concerns that he might evade prosecution or destroy evidence.
“I assert that the allegations are untrue. I have never authorized or condoned any illegal actions,” Kim stated during a staff meeting at Kakao last week, according to the Times. The company described the arrest as “unfortunate.”
The 58-year-old businessman is accused of influencing the stock of SM Entertainment amid a takeover bid last year to thwart Hybe, another leading K-pop agency, from acquiring it.
Both SM Entertainment and Hybe are significant players in South Korea’s K-pop industry, managing major acts such as Aespa and BTS, respectively.
Kakao ultimately 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 headquartered in Jeju City, Kakao, in which Kim owns approximately a 24% stake, employed over 10,000 individuals in 2020. At one stage, Kim was regarded as South Korea’s wealthiest person, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, indicated this situation could represent Kakao’s most significant crisis.
“It will be up to those who stay at the company to prove that it can operate effectively in the absence of its founder,” he stated.