A South Korean billionaire and technology entrepreneur was taken into custody on Tuesday, facing allegations of stock price manipulation involving 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 granted an arrest warrant due to concerns that he might flee the country or destroy evidence.
Kim, who is 58 years old, denied the accusations, stating in a Kakao staff meeting that he has neither instructed nor supported any illegal activities. The company expressed that the arrest was “unfortunate.”
He is alleged to have manipulated the stock of SM Entertainment during a takeover bid last year to block Hybe, another leading K-pop agency, from acquiring the company.
SM Entertainment and Hybe are two of South Korea’s largest K-pop enterprises, representing popular groups like Aespa and BTS, respectively. Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, faced indictments on similar stock manipulation allegations.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people, and Kim held about a 24% share of the company as of 2020. He was once considered the richest person in South Korea, with an estimated fortune exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. A business professor noted that this incident could represent a significant crisis for Kakao, emphasizing that it will be crucial for the remaining leadership to demonstrate the company’s ability to function effectively without its founder.