A prominent South Korean billionaire and tech entrepreneur was taken into custody on Tuesday for allegedly engaging in stock price manipulation concerning a leading K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet faced formal charges as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant to ensure his presence, expressing concerns that he might flee the country or destroy evidence.
In response to the allegations, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent meeting at Kakao. The company described the arrest as “unfortunate.”
At 58, Kim is accused of manipulating the stock of SM Entertainment during a takeover last year to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop entities, representing popular groups like Aespa and BTS, respectively. Ultimately, Kakao acquired SM Entertainment. Additionally, last year, Kakao’s chief investment officer Bae Jae-hyun was indicted on related stock manipulation charges.
Kim founded Kakao in 2010, and he held a 24% stake in the firm, which employed over 10,000 individuals in 2020. He was once 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 fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing the necessity for the remaining team to demonstrate that the company can thrive even in the founder’s absence.