A South Korean billionaire and technology leader was taken into custody on Tuesday due to allegations of stock price manipulation involving a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech firm Kakao, has yet to be formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court amid concerns from prosecutors that he might flee the country or destroy evidence.
“I firmly assert that these allegations are false. I have never directed or endorsed any illegal actions,” Kim reportedly stated during a recent company meeting. Kakao described the arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart another major K-pop agency, Hybe, from acquiring it.
Both SM Entertainment and Hybe are leading players in the South Korean K-pop industry, promoting acts such as Aespa and BTS.
Following the events, Kakao ultimately secured SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, faced indictment on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao was under Kim’s direction, who held a 24% stake in the company and employed over 10,000 people as of 2020. At one time, Kim was recognized as South Korea’s wealthiest individual, with an estimated fortune exceeding $13 billion.
In reaction to the news of his arrest, Kakao’s stock price fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, indicated that this incident could represent Kakao’s “biggest crisis,” implying that it is now up to the remaining leadership to prove the company can thrive in Kim’s absence.