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 tech firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court granted an arrest warrant to ensure his presence, as authorities expressed concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a recent staff meeting at Kakao, as reported. The company referred to his arrest as “unfortunate.”
At 58 years old, Kim faces accusations of manipulating the stock of SM Entertainment as part of a strategy to thwart a takeover by Hybe, another significant K-pop agency. SM Entertainment and Hybe are two of the largest companies in South Korea’s K-pop industry, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao did successfully acquire SM Entertainment. Additionally, last year, Kakao’s chief investment officer Bae Jae-hyun faced indictment on charges of stock manipulation.
Kim founded Kakao in 2010, which is based in Jeju City. He held approximately a 24% stake in the company, which employed over 10,000 people in 2020. He was once recognized as South Korea’s richest 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, suggested that this could represent Kakao’s “biggest crisis.” “It will 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 remarked.