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 Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure his appearance, as prosecutors expressed 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 staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old is accused of engaging in stock manipulation of SM Entertainment during a takeover attempt to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two leading K-pop companies in South Korea, representing popular acts Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on similar stock manipulation charges.
Founded in 2010 in Jeju City, Kakao employs over 10,000 people and Kim holds roughly a 24% stake in the company. At one point, he was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a business professor at Korea University, remarked that this could be Kakao’s “biggest crisis,” stressing the importance for remaining leadership to demonstrate that the company can operate effectively without its founder.