A prominent tech entrepreneur from South Korea was taken into custody on Tuesday over allegations of stock price manipulation involving a major K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court authorized an arrest warrant for him due to concerns that he might flee the country or tamper with evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a recent meeting at Kakao. The company expressed its disappointment regarding the arrest, labeling it “unfortunate.”
The 58-year-old entrepreneur is accused of influencing the stock of SM Entertainment last year as part of a scheme to thwart Hybe, another leading K-pop agency, from acquiring the company.
SM Entertainment and Hybe are two of South Korea’s most significant K-pop firms, representing popular groups Aespa and BTS, respectively.
Kakao went on to purchase SM Entertainment. Last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people as of 2020, and Kim holds approximately a 24% stake in the company. He was once considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.” He emphasized that it is up to the remaining team at the company to demonstrate its capability to function effectively in the absence of its founder.