A South Korean billionaire and technology entrepreneur was taken into custody on Tuesday for allegedly manipulating stock prices of a major K-pop agency during a deal conducted last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant amid concerns from prosecutors 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 in a staff meeting at Kakao last week. The company expressed that it views the arrest as “unfortunate.”
The 58-year-old Kim is accused of distorting the stock value of SM Entertainment in connection with a takeover last year, in an effort to thwart rival K-pop agency Hybe from acquiring the company.
SM Entertainment and Hybe are two of South Korea’s leading K-Pop companies, with SM representing groups like Aespa and Hybe representing BTS.
Kakao ultimately secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted for similar stock manipulation allegations.
Kim founded Kakao, which is based in Jeju City, in 2010 and held about a 24% ownership stake in the company. Kakao employed over 10,000 personnel as of 2020. Once considered South Korea’s wealthiest individual, Kim’s net worth exceeded $13 billion at its peak.
Following news of his arrest, Kakao’s stock experienced a decline of 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, mentioned this may represent “Kakao’s biggest crisis.” He added, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”