A prominent South Korean billionaire and tech entrepreneur was taken into custody on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might attempt to flee the country or destroy evidence.
In a recent internal meeting at Kakao, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of interfering with the stock of SM Entertainment during a takeover attempt last year to thwart Hybe, another major player in the K-pop industry, from acquiring it.
SM Entertainment and Hybe represent two of South Korea’s biggest K-pop entities, with Aespa and BTS under their respective management.
Kakao eventually secured the acquisition of SM Entertainment. Last year, Bae Jae-hyun, the chief investment officer of Kakao, faced indictment for stock manipulation as well.
Kim founded Kakao, which is based in Jeju City, in 2010. He holds about a 24% stake in the company, which had over 10,000 employees as of 2020. At one point, Kim was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested that this incident could represent a significant crisis for Kakao. He remarked that it would now be up to the remaining leadership at the company to demonstrate that it can function effectively without its founder.