A South Korean billionaire and technology executive was taken into custody on Tuesday for allegedly manipulating the stock of a prominent 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 due to concerns that he might flee the country or destroy evidence.
In a company meeting last week, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of interfering with the stock of SM Entertainment during a takeover attempt last year to hinder Hybe, another leading K-pop agency, from purchasing it.
Both SM Entertainment and Hybe are major players in the South Korean K-Pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually ended up acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Kim founded Kakao in 2010, with the company based in Jeju City. He owned about 24% of the company, which employed over 10,000 people as of 2020. At one time, he was South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate that the company can function effectively without its founder.