A South Korean billionaire and tech entrepreneur was detained on Tuesday over allegations of stock price manipulation involving a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech giant Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court, with prosecutors expressing concerns that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment amid a takeover attempt last year, allegedly to thwart competitor Hybe, another major K-pop agency, from acquiring it.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately completed the acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Kim launched Kakao in 2010, and he held a roughly 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was considered South Korea’s wealthiest individual, with a net worth surpassing $13 billion.
Following news of Kim’s arrest, Kakao’s stock declined by 5%. Industry expert Woochan Kim from Korea University Business School remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing that it will be crucial for the remaining leadership to demonstrate the company’s resilience in Kim’s absence.