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 transaction last year.
Kim Beom-su, the founder of technology firm Kakao, has not yet been formally charged, according to reports. Authorities at the Seoul Southern District Court issued an arrest warrant, expressing concerns that he might flee the country or destroy evidence.
Kim asserted during a recent company meeting that the allegations against him are false and that he has never supported or allowed any illegal activities. Kakao described the situation as “unfortunate.”
The 58-year-old is accused of artificially influencing the stock of SM Entertainment during a takeover bid last year to thwart Hybe, another prominent K-pop agency, from gaining control.
SM Entertainment and Hybe are among the largest K-Pop firms in South Korea, representing successful groups like Aespa and BTS. Ultimately, Kakao was able to secure the acquisition of SM Entertainment. Previously, Bae Jae-hyun, Kakao’s chief investment officer, was indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is significant in the tech landscape, with Kim owning approximately 24% of the company. It employed over 10,000 individuals in 2020, and at one point, Kim was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. A professor from Korea University Business School remarked that this could represent the company’s “biggest crisis,” suggesting that it is essential for the remaining leaders to demonstrate that the firm can continue to operate smoothly in the absence of its founder.