A South Korean billionaire and technology entrepreneur was detained on Tuesday for allegedly manipulating stock prices at 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 indicted. The Seoul Southern District Court approved an arrest warrant amid concerns from prosecutors that he might flee the country or destroy evidence.
Kim has denied the allegations, asserting during a staff meeting at Kakao that he has never authorized or supported any unlawful activities. The company described his arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover process to thwart another major K-pop company, Hybe, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s leading K-pop firms, representing popular groups Aespa and BTS, respectively.
Kakao eventually secured the acquisition of SM Entertainment. In addition, last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar charges of stock manipulation.
Kim established Kakao in Jeju City in 2010 and held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was recognized as South Korea’s richest individual, with an estimated wealth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock prices fell by 5% on Tuesday.
Woochan Kim, a business school professor at Korea University, commented that this could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate that the company can continue to thrive in Kim’s absence.