A South Korean billionaire and tech 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 the tech firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim denied the allegations, stating, “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 entrepreneur is accused of influencing the stock of SM Entertainment during its takeover, allegedly to thwart 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.
Kakao ultimately secured the purchase of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, faced indictment on charges of stock manipulation as well.
Founded in 2010 and based in Jeju City, Kakao has grown significantly, with Kim owning about 24% of the company and more than 10,000 employees in 2020. At one point, he was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the arrest announcement, Kakao’s stock price fell by 5%. Woochan Kim, a professor at Korea University Business School, noted that this incident could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s viability without its founder.