A South Korean billionaire and technology executive 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 tech firm Kakao, has not yet been officially charged, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure he remains in custody, as prosecutors are concerned he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated during a meeting at Kakao last week. The company has described his arrest as “unfortunate.”
The 58-year-old is accused of altering the stock of SM Entertainment during a takeover bid to thwart Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe are two of the largest K-Pop companies in South Korea, known for representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted for similar stock manipulation charges.
Kim founded Kakao, based in Jeju City, in 2010 and holds approximately a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one point, he was recognized as South Korea’s richest person, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, commented that this could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s capability to thrive without its founder.