A South Korean billionaire and prominent tech entrepreneur was taken into custody on Tuesday due to allegations of stock price manipulation involving a leading 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 due to concerns that he might flee the country or destroy evidence.
Kim denied the allegations, asserting during a recent staff meeting at Kakao that he has never engaged in or permitted any unlawful activities. Kakao described the situation as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment as part of a strategy to thwart rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe are considered two of South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was similarly indicted for stock manipulation.
Founded in 2010 in Jeju City, Kakao is a major player in the tech industry, with Kim owning approximately a 24% stake as of 2020 when the company employed over 10,000 people. At one point, he was the richest individual in South Korea, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock price fell by 5%. Woochan Kim, a professor at Korea University Business School, indicated that this could represent Kakao’s most significant crisis to date. He emphasized the necessity for the remaining leadership to demonstrate that the company can continue to thrive without its founder.