A South Korean billionaire and tech entrepreneur was taken into custody on Tuesday for allegedly manipulating the stock prices of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant over concerns that he might flee the country or destroy evidence related to the case.
In a recent staff meeting at Kakao, Kim proclaimed his innocence, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment as part of a maneuver to block rival Hybe, another leading K-pop agency, from taking over the company. SM Entertainment and Hybe are among South Korea’s largest K-pop firms, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, while last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded in 2010 and based in Jeju City, Kakao had more than 10,000 employees as of 2020. Kim held approximately 24% of the company’s shares and at one time was South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of the arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, indicated that this could represent a significant crisis for Kakao, stating, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”