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 deal from the previous year.
Kim Beom-su, the founder of the 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.
Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a meeting at Kakao last week. The company expressed disappointment over the arrest, calling it “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment during a takeover attempt, allegedly aiming to thwart rival agency Hybe from acquiring it. Both SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing popular acts such as Aespa and BTS.
Kakao eventually succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun also faced indictment on similar stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao has a workforce of over 10,000 as of 2020. At one point, Kim was dubbed South Korea’s richest individual, with a net worth exceeding $13 billion.
In reaction to the news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, indicated that this scenario could mark Kakao’s “biggest crisis,” emphasizing the responsibility of the remaining leadership to prove that the company can thrive without its founder’s presence.