A significant South Korean billionaire and technology executive was taken into custody on Tuesday for allegedly manipulating the stock price of a leading K-pop agency in connection with a deal from the previous year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant, anticipating that he may attempt to flee the country or destroy evidence related to the case.
Kim denied the allegations, stating during a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock values of SM Entertainment during a takeover attempt last year, allegedly to thwart Hybe, another prominent K-pop agency, from acquiring the company.
Both SM Entertainment and Hybe are leading players in South Korea’s K-pop industry, representing popular groups such as Aespa and BTS, respectively.
Ultimately, Kakao went on to acquire SM Entertainment. Additionally, Kakao’s chief investment officer Bae Jae-hyun faced indictment last year on similar stock manipulation charges.
Having established Kakao in 2010, with a base in Jeju City, Kim holds about a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
In the wake of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this incident could represent Kakao’s “biggest crisis,” suggesting it would be imperative for the remaining leadership to demonstrate the company’s resilience in Kim’s absence.