A South Korean billionaire and technology leader 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 the tech company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court approved an arrest warrant for him amid concerns from prosecutors that he might flee the country or destroy evidence.
“I firmly deny the allegations. I have never instructed or supported any illegal activities,” Kim stated at a company meeting last week. Kakao described his arrest as “unfortunate.”
The 58-year-old businessman is accused of engaging in stock manipulation involving SM Entertainment during a takeover attempt last year, which reportedly aimed to thwart rival agency Hybe from acquiring the company.
SM Entertainment and Hybe are among the largest K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually succeeded in acquiring SM Entertainment. Prior to this, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges.
Kim established Kakao in 2010, with its headquarters located in Jeju City. He held approximately a 24% stake in the firm, which employed over 10,000 people as of 2020. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated fortune surpassing $13 billion.
Following the announcement of his arrest, Kakao’s stock fell by 5%.
Woochan Kim, a professor at Korea University Business School, commented that this situation might represent Kakao’s “biggest crisis.” He emphasized that it will be crucial for the remaining leadership at Kakao to demonstrate its ability to operate effectively without its founder.