A South Korean billionaire and technology entrepreneur was taken into custody on Tuesday for alleged stock price manipulation involving a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech giant Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant, citing concerns that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company termed the situation as “unfortunate.”
The 58-year-old entrepreneur is suspected of manipulating the stock of SM Entertainment amidst a takeover to obstruct rival agency Hybe from acquiring it. SM Entertainment and Hybe are among the largest K-Pop companies in South Korea, representing popular acts like Aespa and BTS.
Kakao eventually succeeded in acquiring SM Entertainment, while last year, the company’s chief investment officer, Bae Jae-hyun, was also charged with stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao is a substantial employer with over 10,000 employees as of 2020, and Kim owned approximately 24% of the company. He was once considered South Korea’s wealthiest individual, with a fortune exceeding $13 billion.
Following the announcement of Kim’s arrest, Kakao’s stock price fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested that this could represent Kakao’s “biggest crisis.” He mentioned that it will be crucial for the remaining leadership to demonstrate that the company can function effectively in Kim’s absence.