A South Korean billionaire and technology leader was detained 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 not been officially charged. The Seoul Southern District Court has issued an arrest warrant for his custody, citing concerns that he may flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old businessman is accused of manipulating the shares of SM Entertainment during a takeover attempt last year to thwart rival Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing musical groups Aespa and BTS, respectively.
Kakao eventually succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao had more than 10,000 employees as of 2020, and Kim held approximately a 24% ownership stake in the company. At one point, he was South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5% on Tuesday.
According to Woochan Kim, a professor at Korea University Business School, this situation could represent Kakao’s “biggest crisis.” He emphasized that it would now be up to the remaining team at the company to demonstrate its ability to operate efficiently without its founder.