The billionaire founder of South Korean technology giant Kakao, Kim Beom-Su, was arrested on Tuesday on allegations of stock manipulation related to the company’s investment in one of the country’s largest K-pop agencies.
A high-profile bidding war broke out over the agency, SM Entertainment, early last year. Prosecutors allege, Kakao manipulated SM Entertainment’s stock price to hinder Hybe, the company behind BTS, from acquiring the agency, whose roster of artists includes Girls’ Generation.
Last year, prosecutors indicted Kakao’s chief investment officer and the company itself on stock manipulation charges. The Seoul Southern District Court confirmed that Mr. Kim had been arrested on Tuesday morning.
Mr. Kim, who has not been formally charged, has previously denied the allegations. During a company meeting last week, he said that he had “never instructed or condoned any illegal acts,” local media outlet Yonhap reported. Kakao did not immediately respond to a request for comment.
Kakao’s messaging and payment apps have become crucial infrastructure in South Korea, and the company is worth about $13 billion in market value. KakaoTalk, a messaging app, is installed on over 90 percent of phones in South Korea.
The deal with SM Entertainment was intended to help Kakao establish a foothold in the K-pop business and expand abroad, tapping the South Korean culture wave. Around the time of the deal, Kakao said the investment would help accelerate its “vision of going ‘Beyond Korea’ and ‘Beyond Mobile.’”
This is a developing story.