A South Korean billionaire and tech entrepreneur was taken into custody on Tuesday under allegations of manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant citing concerns that he might flee the country or destroy evidence related to the case.
In a recent meeting with Kakao employees, Kim denied the accusations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao expressed its dismay over the arrest, calling it “unfortunate.”
Kim, 58, is alleged to have tampered with the stock of SM Entertainment during last year’s takeover attempts to thwart rival company Hybe, another significant player in the K-pop industry.
SM Entertainment and Hybe are among South Korea’s leading K-Pop firms, representing popular groups Aespa and BTS, respectively. Kakao eventually acquired SM Entertainment. In a related matter, Kakao’s chief investment officer Bae Jae-hyun was indicted last year on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a major employer, having more than 10,000 staff members in 2020. At one time, Kim was regarded as South Korea’s wealthiest individual, with an estimated fortune exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock experienced a decline of 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing that it will be imperative for the remaining leadership to demonstrate that the company can operate effectively without its founder.