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 giant Kakao, has not been officially charged, according to reports. The Seoul Southern District Court issued a warrant for his arrest due to concerns that he might flee the country or destroy evidence.
Kim asserted his innocence during a Kakao staff meeting, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
At the center of the allegations is Kim’s purported involvement in stock manipulation related to SM Entertainment during a takeover bid last year, which aimed to thwart Hybe, another leading K-pop agency, from acquiring the company.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop firms, representing well-known groups Aespa and BTS, respectively. Kakao eventually completed the acquisition of SM Entertainment, while Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on similar stock manipulation charges last year.
Kim, who founded Kakao in 2010 and holds approximately a 24% stake in the company, saw Kakao employ over 10,000 people in 2020. At one point, he was South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock price fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this incident might represent Kakao’s “biggest crisis.” He noted that it would be critical for the remaining leadership to demonstrate that the company could function effectively in the absence of its founder.