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 transaction last year.
Kim Beom-su, the founder of Kakao, has yet to face formal charges, according to reports. The Seoul Southern District Court issued an arrest warrant for Kim, as prosecutors expressed concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated during a company meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment as part of a strategy to obstruct Hybe, another leading K-pop company, from acquiring it. SM Entertainment and Hybe are among the largest K-Pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Previously, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a significant employer, having over 10,000 staff members in 2020. Kim, who holds approximately a 24% stake in the company, was once South Korea’s richest individual, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, indicated that this could represent Kakao’s “biggest crisis.” He added that it would be essential for the remaining leadership at the company to demonstrate that it can thrive without its founder.