A billionaire tech entrepreneur from South Korea was taken into custody on Tuesday for allegedly manipulating the stock prices of a well-known K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has yet to be formally charged according to reports. An arrest warrant was issued by the Seoul Southern District Court amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim, during a staff meeting at Kakao last week, stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company referred to the arrest as “unfortunate.”
The 58-year-old is accused of engaging in stock manipulation of SM Entertainment during a takeover attempt that occurred last year, with motives to thwart another major agency, Hybe, from acquiring the company.
Both SM Entertainment and Hybe are among the largest entities in South Korea’s K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao successfully completed the acquisition of SM Entertainment, and last year, Bae Jae-hyun, the chief investment officer of Kakao, was indicted on similar stock manipulation charges.
Kim established Kakao, which is based in Jeju City, in 2010 and holds approximately a 24% ownership stake in the company. In 2020, it employed over 10,000 individuals and at one point, Kim was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock experienced a 5% decline.
Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing that it would be crucial for the company’s remaining leadership to demonstrate its capability to function effectively without its founder.