A billionaire and tech entrepreneur from South Korea was apprehended on Tuesday due to allegations of manipulating the stock price of a prominent K-pop agency during a deal that took place last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, as reported by the New York Times. The Seoul Southern District Court has issued an arrest warrant for him amid concerns that he might attempt to flee the country or destroy evidence.
In a recent meeting with employees, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has described the arrest as “unfortunate.”
Kim, 58, is accused of engaging in stock manipulation concerning SM Entertainment during a takeover last year, aimed at thwarting another major K-pop agency, 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.
Ultimately, Kakao secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted for stock manipulation.
Kim founded Kakao in 2010, with the headquarters located in Jeju City. He held approximately a 24% stake in the company, which employed over 10,000 individuals in 2020. At one time, he was considered the richest person in South Korea, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.”
“It would be up to those who remain at the company to demonstrate that it can operate effectively even in the absence of the founder,” he noted.