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, founder of the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant out of concern that he might flee the country or destroy evidence.
Kim, 58, has denied the allegations, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts,” in a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment during a takeover bid last year, allegedly to thwart Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe are key players in South Korea’s K-Pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually secured the acquisition of SM Entertainment. Additionally, last year, Bae Jae-hyun, Kakao’s chief investment officer, was indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao had more than 10,000 employees as of 2020, and Kim held approximately a 24% stake in the company. At one time, he was South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, noted that this situation could represent Kakao’s “biggest crisis,” emphasizing the importance for those remaining at the company to demonstrate its stability in the founder’s absence.