A billionaire South Korean 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 the technology firm Kakao, has yet to face formal charges. The Seoul Southern District Court authorized his arrest to ensure he remains in custody, as prosecutors expressed concerns he might flee the country or conceal evidence.
In a recent staff meeting, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment during its takeover last year to obstruct rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, while last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao, in which Kim holds about a 24% stake, employed over 10,000 individuals in 2020. Kim was once the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
According to Woochan Kim, a professor at Korea University Business School, this situation could represent Kakao’s “biggest crisis.” He noted, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”