A South Korean billionaire and tech leader was taken into custody on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court authorized his arrest due to concerns that he might attempt to flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim asserted in a staff meeting at Kakao last week. The company expressed that the arrest was “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover attempt, allegedly to thwart Hybe, another significant K-pop agency, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-pop firms, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim established Kakao, which is based in Jeju City, in 2010. He held approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one time, Kim was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this situation could represent Kakao’s “biggest crisis.”
“It would be the responsibility of those who remain at the company to demonstrate that it can operate effectively even in the absence of the founder,” he noted.