A prominent South Korean billionaire and technology entrepreneur was taken into custody on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant for him, with prosecutors expressing concerns that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim asserted his innocence, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has termed the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating shares of SM Entertainment during a takeover bid last year, allegedly as a means to hinder Hybe, another major K-pop agency, from acquiring the company.
SM Entertainment and Hybe are two of the largest names in the South Korean K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Kim founded Kakao in 2010, and he holds approximately a 24% stake in the company, which employed more than 10,000 individuals in 2020. At one point, he was regarded as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock declined by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing that the remaining leadership must demonstrate the company’s ability to function effectively in Kim’s absence.