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 Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court approved an arrest warrant amid concerns that he might flee the country or destroy evidence.
Kim denied the allegations, stating during a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company expressed that his arrest was “unfortunate.”
The 58-year-old entrepreneur faces accusations of manipulating shares of SM Entertainment in an attempt to thwart a takeover bid by Hybe, another significant player in the K-pop industry.
Both SM Entertainment and Hybe are major K-pop organizations in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, which has its headquarters in Jeju City. He maintains approximately a 24% ownership stake in the company, which employed over 10,000 individuals as of 2020. At one point, he was considered South Korea’s wealthiest person, with a net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock saw a decline of 5%.
Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent the “biggest crisis” for Kakao. He emphasized that it is now up to the remaining executives to demonstrate that the company can continue to operate effectively in the absence of its founder.