A South Korean billionaire and tech entrepreneur was taken into custody on Tuesday over allegations of stock price manipulation concerning a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court issued an arrest warrant amid concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a company meeting last week, maintaining his innocence. Kakao described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment as part of a strategy to thwart a takeover attempt by Hybe, another significant player in the K-pop industry.
SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, overseeing popular groups such as Aespa and BTS. Ultimately, Kakao completed its acquisition of SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted for similar stock manipulation offenses.
Kim founded Kakao in 2010, and he held a 24% stake in the company, which had over 10,000 employees as of 2020. He was at one point regarded 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%. Woochan Kim, a professor at Korea University Business School, suggested that this could represent Kakao’s “biggest crisis,” emphasizing the need for remaining executives to demonstrate the company’s ability to operate effectively in Kim’s absence.