A South Korean billionaire and tech entrepreneur was detained on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant for him amid concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, emphasizing that the allegations against him are false. The company referred to the arrest as “unfortunate.”
The 58-year-old is accused of manipulating shares of SM Entertainment in the course of a takeover attempt last year to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually ended up acquiring SM Entertainment. Last year, the company’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 has become a significant player in South Korea’s tech landscape, with Kim holding approximately a 24% stake in the firm. At one point, he was regarded as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested that this could represent Kakao’s “biggest crisis,” highlighting the responsibility of the remaining executives to ensure the company continues to operate effectively without its founder.