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 deal last year.
Kim Beom-su, the founder of the technology giant Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court issued an arrest warrant amidst concerns that he might attempt to flee the country or destroy evidence related to the allegations.
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 his arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment in a bid to block rival agency Hybe from making an acquisition last year.
SM Entertainment and Hybe are two leading companies in the South Korean K-pop industry, representing major acts such as Aespa and BTS respectively.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun faced indictment on similar stock manipulation charges.
Kim founded Kakao in 2010, with its main office located in Jeju City. He holds approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, Kim was considered South Korea’s wealthiest individual, 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, remarked that this situation could represent “Kakao’s biggest crisis,” adding that it will be essential for the remaining leadership to demonstrate that the company can successfully operate without its founder.