A South Korean billionaire and tech entrepreneur 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 technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court has authorized his arrest, expressing concerns that he may attempt to flee the country or destroy evidence.
“I refute the allegations. I have never directed or endorsed any unlawful activities,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old is accused of tampering with the stock of SM Entertainment during a takeover bid last year, allegedly orchestrating a plot to impede rival company Hybe from acquiring it. 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. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also charged with stock manipulation.
Kim founded Kakao in 2010, and maintains about a 24% ownership stake in the company, which employed over 10,000 people in 2020. He was once recognized as South Korea’s wealthiest individual, 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 “most significant crisis.” He emphasized that it is now up to Kim’s successors to demonstrate the company’s ability to thrive in his absence.