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 the technology firm Kakao, has not yet faced formal charges, according to reports. A warrant for his arrest was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he may flee the country or destroy evidence.
Kim asserted his innocence during a company meeting last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old businessman is accused of manipulating SM Entertainment’s stock during a takeover attempt last year to obstruct rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe represent some of South Korea’s largest K-Pop groups, including Aespa and BTS.
Kakao ultimately successfully acquired SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar charges of stock manipulation.
Founded in 2010, Kakao is based in Jeju City, and Kim retains approximately a 24% ownership stake in the company. In 2020, it employed over 10,000 workers and at one time made Kim the richest individual in South Korea, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing that it will be crucial for the remaining leadership to prove the company’s stability in the absence of its founder.