A South Korean billionaire and tech entrepreneur was detained on Tuesday for allegedly influencing the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of technology company Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court authorized his arrest due to concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
Kim, who is 58 years old, is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among South Korea’s leading K-pop companies, representing popular groups like Aespa and BTS.
Ultimately, Kakao succeeded in acquiring SM Entertainment. 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 employed over 10,000 people by 2020, with Kim holding approximately a 24% stake in the company. At one point, he was recognized as South Korea’s wealthiest individual, boasting a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price fell by 5%.
Woochan Kim, a professor at Korea University Business School, noted that this situation might represent Kakao’s “biggest crisis.” He emphasized that it is now up to the remaining management to demonstrate that the company can operate effectively in the absence of its founder.