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 deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court authorized an arrest warrant due to concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is under suspicion for manipulating SM Entertainment’s stock during a takeover attempt last year, allegedly to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two of the largest K-Pop entities in South Korea, representing popular groups such as Aespa and BTS.
Kakao ultimately completed the acquisition of SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on charges of stock manipulation.
Kim founded Kakao in 2010, which is based in Jeju City. He holds approximately a 24% stake in the company, which employed over 10,000 people in 2020 and at one point made him South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, noted that this could represent “Kakao’s biggest crisis.” He stressed the need for the remaining team at the company to demonstrate that it could operate effectively without its founder.