A South Korean billionaire and tech entrepreneur was taken into custody on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not been officially charged, according to reports. The Seoul Southern District Court has issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The accusations against Kim, 58, involve alleged manipulation of SM Entertainment’s stock amid a takeover bid last year, as part of a strategy to block the rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun also faced indictment on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao employed over 10,000 people as of 2020, with Kim holding a roughly 24% stake in the company. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5%. Business professor Woochan Kim from Korea University Business School remarked that this could represent Kakao’s “biggest crisis,” emphasizing that it would be crucial for remaining company leaders to demonstrate that operations can continue smoothly in Kim’s absence.