A South Korean billionaire and tech executive was taken into custody on Tuesday for allegedly manipulating the stock prices of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been formally charged. The Seoul Southern District Court authorized an arrest warrant out of concern that he might flee the country or destroy evidence.
Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent staff meeting at Kakao. The company characterized his arrest as “unfortunate.”
The 58-year-old is accused of interfering with the stock of SM Entertainment during a takeover bid last year, allegedly to thwart a competing acquisition attempt by Hybe, another leading K-pop agency.
Both SM Entertainment and Hybe are significant players in South Korea’s K-pop industry, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 individuals as of 2020, and Kim held approximately a 24% stake in the company. He was once recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%.
Woochan Kim, a professor at Korea University Business School, indicated that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for those remaining in the company to demonstrate its ability to function effectively without the founder.