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 Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court approved an arrest warrant amid concerns that he might flee the country or destroy evidence.
Kim stated during a staff meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover deal last year to hinder Hybe, another significant K-pop label, from acquiring it.
SM Entertainment and Hybe are among the most prominent K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately purchased SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao employs over 10,000 people as of 2020, with Kim holding about a 24% stake in the company. He was once considered South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested that this situation could represent Kakao’s “biggest crisis.” He added, “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.”