A South Korean billionaire and tech 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 Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court amid 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 situation as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment in relation to a takeover attempt, aiming to hinder competitor Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups like Aespa and BTS.
Ultimately, Kakao ended up acquiring SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao had over 10,000 employees as of 2020, with Kim owning about a 24% stake in the company. He was once considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate that the company can effectively operate without its founder.