Kim Bum-soo, the billionaire founder of South Korean technology giant Kakao, was arrested on Tuesday on suspicion of stock price manipulation linked to his company's investment in South Korea's largest K-pop agency.
A high-profile bidding war erupted around SM Entertainment early last year, with prosecutors alleging that Kakao manipulated SM Entertainment's stock price to block Hybe, the subsidiary of BTS, from acquiring the agency, which represents artists such as Girls' Generation.
Prosecutors last year indicted Kakao's chief investment officer and the company on charges of manipulating stock prices. The Southern Seoul District Court confirmed Kim's arrest on Tuesday morning.
Kim, who has not been formally charged, has so far denied the allegations. He said at an internal meeting last week that he “never ordered or condoned any illegal activities,” local media Yonhap News Agency reported. Kakao did not immediately respond to a request for comment.
Kakao's messaging and payment apps have become critical infrastructure in South Korea, giving the company a market capitalization of roughly $13 billion. Its messaging app, KakaoTalk, is installed on more than 90% of South Korean mobile phones.
The deal with SM Entertainment was aimed at helping Kakao gain a foothold in the K-pop business and ride the wave of Korean culture overseas. At the time, Kakao said the investment would help accelerate its “visions of 'Beyond Korea' and 'Beyond Mobile.'”
This is a developing story.
