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 executed last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court authorized his arrest due to concerns that he might flee the country or destroy evidence related to the investigation.
Kim strongly denied the allegations, asserting in a company meeting that he has never condoned or instructed any illegal activities. Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of artificially inflating the stock of SM Entertainment during a takeover attempt last year to thwart the acquisition by rival K-pop agency Hybe. SM Entertainment and Hybe are two leading K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed its acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people as of 2020, with Kim holding about a 24% stake in the company. At one point, he was regarded as South Korea’s richest individual, with a net worth surpassing $13 billion.
Following the arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, stated that this incident could represent “Kakao’s biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s resilience in the absence of its founder.