A billionaire South Korean tech entrepreneur was detained on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet faced formal charges. The Seoul Southern District Court authorized an arrest warrant amid concerns that he might 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.” The company described the arrest as “unfortunate.”
The 58-year-old businessman is accused of manipulating the stock of SM Entertainment during a takeover bid last year, which was allegedly part of a scheme to thwart Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-pop firms, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao successfully acquired SM Entertainment. Furthermore, 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, in which Kim holds approximately a 24% stake, had employed over 10,000 people as of 2020. At one point, Kim was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock declined by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this could represent Kakao’s “biggest crisis.” He emphasized the importance of demonstrating the company’s resilience in the founder’s absence.