A prominent South Korean billionaire and tech executive was taken into custody on Tuesday amid allegations of stock price manipulation related to a significant K-pop agency during a merger last year.
Kim Beom-su, the founder of Kakao, has yet to face formal charges. However, the Seoul Southern District Court granted a warrant for his arrest due to concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts; these allegations are not true,” Kim stated during a recent staff meeting at Kakao, which described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment during a takeover bid last year, allegedly to obstruct rival Hybe, another major player in the K-pop industry, from acquiring the company.
SM Entertainment and Hybe are two of the largest K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively. Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges related to stock manipulation.
Founded in 2010, Kakao, which is based in Jeju City, is a major tech company in South Korea, employing over 10,000 individuals as of 2020. At one time, Kim was considered the richest person in South Korea, with a net worth exceeding $13 billion.
In response to the news of his 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 most significant crisis, stating, “It will be up to those who remain at the company to demonstrate that it can operate effectively, even in the absence of its founder.”