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 transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet faced formal charges, according to reports. An arrest warrant was issued by the Seoul Southern District Court amid concerns that he may attempt to flee the country or destroy evidence.
“I firmly deny the allegations. I have never authorized or endorsed any illegal activities,” Kim stated during a staff meeting at Kakao last week. The company characterized the arrest as “unfortunate.”
The 58-year-old businessman is accused of artificially inflating the stock value of SM Entertainment during a takeover process as part of an effort to thwart Hybe, another leading K-pop agency, from acquiring the company.
SM Entertainment and Hybe are two of the largest K-pop firms in South Korea, representing major artists such as Aespa and BTS.
Kakao eventually completed the acquisition of SM Entertainment. Last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Kim established Kakao in 2010, with its headquarters in Jeju City. He holds approximately a 24% share in the company, which employed over 10,000 individuals as of 2020. At one point, he was considered South Korea’s wealthiest individual, with an estimated fortune exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5%. A professor at Korea University Business School commented that this incident could represent Kakao’s “biggest crisis,” emphasizing that the remaining leadership must demonstrate that the company can continue to operate effectively without its founder.