A billionaire South Korean tech entrepreneur was taken into custody on Tuesday for allegedly manipulating the stock price of 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 due to concerns that he might flee the country or destroy evidence.
In a meeting with staff at Kakao last week, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” His company described the arrest as “unfortunate.”
The 58-year-old is accused of stock manipulation involving SM Entertainment during a takeover attempt last year, allegedly aimed at obstructing rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two leading K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao had over 10,000 employees in 2020, with Kim holding approximately a 24% stake in the company. At one time, he was South Korea’s richest individual, boasting an estimated 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, stated this incident could represent Kakao’s “biggest crisis.” He added, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”