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 in connection with a deal from the previous year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court, prompted by concerns from prosecutors that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, denying the allegations. The company described his arrest as “unfortunate.”
At 58 years old, Kim faces accusations of altering the stock of SM Entertainment during a takeover last year, allegedly working to prevent rival K-pop agency Hybe from acquiring the company.
Both SM Entertainment and Hybe rank among the largest K-pop firms in South Korea, associated with popular groups Aespa and BTS, respectively.
Kakao eventually took over SM Entertainment, and last year, the firm’s chief investment officer, Bae Jae-hyun, also faced indictment for stock manipulation.
Founded in 2010 and based in Jeju City, Kakao was reported to employ over 10,000 individuals in 2020, with Kim holding around a 24% ownership stake. At one time, he was considered South Korea’s wealthiest individual, boasting an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock experienced a decline of 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this incident might represent Kakao’s most significant crisis to date.
“It will be the responsibility of those who remain in the company to demonstrate that it can continue to operate effectively even in the absence of the founder,” he noted.