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 technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant for him amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim stated at a recent staff meeting that the allegations are untrue and that he has never authorized or supported any illegal activities. Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover bid last year as part of a strategy to thwart Hybe, another significant K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively. Kakao eventually acquired SM Entertainment, while last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is still largely owned by Kim, who held a 24% stake in the company as of 2020, when it employed over 10,000 people. Kim was once 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%. Woochan Kim, a professor at Korea University Business School, suggested that this could be Kakao’s “biggest crisis” and emphasized that it would be up to the remaining leadership to demonstrate the company’s ability to thrive without its founder.