A South Korean billionaire and tech entrepreneur was taken into custody on Tuesday for allegedly engaging in stock price manipulation related to a major K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant amidst concerns from prosecutors about the possibility of him fleeing the country or tampering with evidence.
Kim asserted his innocence during a staff meeting at Kakao last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company expressed that the arrest is “unfortunate.”
The 58-year-old businessman is accused of manipulating shares of SM Entertainment during a takeover attempt last year, allegedly to thwart Hybe, another prominent K-pop agency, from acquiring the company.
SM Entertainment and Hybe are two of South Korea’s leading K-Pop firms, representing popular groups such as Aespa and BTS, respectively.
Kakao eventually succeeded in acquiring SM Entertainment. Additionally, last year, Kakao’s chief investment officer Bae Jae-hyun faced indictments for similar stock manipulation activities.
Kim founded Kakao in 2010, and currently holds approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was known as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” and emphasized the need for the remaining leadership at the company to demonstrate its ability to operate effectively without its founder.