A South Korean billionaire and tech entrepreneur 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 been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he might attempt to flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a meeting with Kakao staff last week. The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur faces accusations of stock manipulation involving SM Entertainment during a takeover attempt last year, aimed at obstructing Hybe, another major K-pop agency, from acquiring it.
Both SM Entertainment and Hybe are key players in the K-pop industry, representing popular groups such as Aespa and BTS.
Kakao ultimately took over SM Entertainment. Additionally, Kakao’s chief investment officer, Bae Jae-hyun, was indicted last year on related stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao is a significant company in South Korea, employing over 10,000 people as of 2020. Kim once held the title of South Korea’s richest individual, with an estimated net worth surpassing $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 situation could represent Kakao’s “biggest crisis.”
“It would be the responsibility of those remaining at the company to demonstrate that it can operate effectively even in the absence of the founder,” he noted.