A South Korean billionaire and tech entrepreneur was detained on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant, citing concerns that he may flee the country or destroy evidence.
Kim has denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a staff meeting last week. Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover last year to thwart 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 completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, which is based in Jeju City. He held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, suggested that this crisis could be significant for Kakao, stating it would be up to the remaining team to demonstrate that the company can operate effectively without its founder.