A billionaire entrepreneur from South Korea and tech executive was taken into custody on Tuesday under allegations of manipulating stock prices of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet faced formal charges, according to reports. A Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
Kim stated in a recent staff meeting at Kakao that the allegations are false, asserting, “I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is facing accusations of influencing the stock of SM Entertainment during a takeover process last year in an effort to thwart Hybe, another leading K-pop agency, from acquiring the company.
SM Entertainment and Hybe are among South Korea’s largest K-pop enterprises, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao secured the acquisition of SM Entertainment. Previously, the chief investment officer of Kakao, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim established Kakao in 2010, with its headquarters in Jeju City. He held approximately a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one time, he was considered the richest person in South Korea, with a net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock price dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested that this might represent Kakao’s most significant challenge. He remarked that it will be essential for those remaining in the company to demonstrate its ability to operate effectively without its founder.