A South Korean billionaire and technology mogul 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 technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant out of concern that he might flee the country or destroy evidence.
In response to the allegations, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts” during a company meeting last week. Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe are two of the leading companies in South Korea’s K-pop industry, representing popular groups such as Aespa and BTS.
Kakao ultimately completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on stock manipulation charges.
Kim established Kakao in 2010, and as of 2020, the company had over 10,000 employees. He once held the title of South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock price dropped by 5%. Woochan Kim, a professor at Korea University Business School, suggested that this could represent Kakao’s most significant crisis yet. He emphasized that it would be up to those remaining at the company to demonstrate its ability to operate effectively in the founder’s absence.