A prominent South Korean billionaire and tech entrepreneur has been taken into custody for alleged stock price manipulation involving a major K-pop agency during a deal that occurred last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet been formally charged according to reports. An arrest warrant was issued by the Seoul Southern District Court amid concerns that he might flee the country or destroy evidence.
Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent meeting with staff at Kakao. The company described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating SM Entertainment’s stock during a takeover bid to thwart rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe are two of the leading firms in South Korea’s K-pop industry, home to popular acts like Aespa and BTS.
Kakao ultimately secured the acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao, in which Kim retains a 24% stake, employed over 10,000 people as of 2020. At one point, Kim was considered South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the arrest, Kakao’s stock dropped by 5%. A professor from Korea University Business School suggested this situation could be Kakao’s “biggest crisis,” emphasizing the need for the remaining leaders at the company to demonstrate effective management in Kim’s absence.