A South Korean billionaire and tech entrepreneur was taken into custody on Tuesday for allegedly manipulating the stock price of a major K-pop entertainment company during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet faced formal charges. The Seoul Southern District Court authorized the arrest warrant due to concerns that he might flee the country or destroy evidence, as reported by the New York Times.
In a meeting with staff at Kakao last week, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment in connection with a takeover attempt last year, orchestrated to thwart rival K-pop agency Hybe from acquiring the company.
SM Entertainment and Hybe are among the largest K-Pop entities in South Korea, representing popular groups such as Aespa and BTS, respectively.
Ultimately, Kakao acquired SM Entertainment. Interestingly, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges last year.
Kim established Kakao, based in Jeju City, in 2010 and holds approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was the richest person in South Korea, with an estimated wealth exceeding $13 billion.
Following news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested this could be Kakao’s most significant crisis. “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,” he remarked.