A South Korean billionaire and technology 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 the tech giant Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns from prosecutors that he might flee the country or destroy evidence related to the case.
In a staff meeting at Kakao last week, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur faces accusations of manipulating the stock of SM Entertainment during a takeover attempt last year to obstruct a rival acquisition by Hybe, another leading K-pop firm.
Both SM Entertainment and Hybe are significant players in South Korea’s K-Pop industry, representing popular groups like Aespa and BTS. Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim established the company, based in Jeju City, in 2010. He held approximately a 24% stake in Kakao, which employed over 10,000 individuals as of 2020. At one point, he was regarded as the wealthiest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this situation might represent Kakao’s “biggest crisis.” He emphasized that it is now the responsibility of the remaining company leaders to demonstrate that the organization can thrive in the absence of its founder.