A South Korean billionaire and tech entrepreneur was taken into custody on Tuesday under allegations of manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him amid concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company described his arrest as “unfortunate.”
Kim, 58, is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, aiming to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing artists such as Aespa and BTS.
Ultimately, Kakao acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, with the company’s headquarters in Jeju City. He held approximately a 24% stake in the firm, which had more than 10,000 employees by 2020. At one time, he was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a business professor at Korea University, commented that this could be “Kakao’s biggest crisis.” He added that it would be essential for remaining company leaders to demonstrate that the business can operate effectively without its founder.