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, as reported by the New York Times. Authorities from the Seoul Southern District Court issued an arrest warrant due to concerns that Kim might flee the country or destroy evidence.
“I firmly deny the allegations. I have never directed or condoned any illegal activities,” Kim stated during a recent staff meeting at Kakao, according to the Times. The company expressed that the arrest was “unfortunate.”
At 58, Kim is being accused of stock manipulation involving SM Entertainment during a takeover attempt last year, which was allegedly aimed at hindering Hybe, another major K-pop agency, from successfully acquiring it.
SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing notable acts such as 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 headquartered in Jeju City, Kakao is a major player in the tech industry, with Kim holding about a 24% stake in the company, which employed over 10,000 individuals in 2020. Kim was once considered South Korea’s richest person, boasting an estimated net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock declined by 5%. Woochan Kim, a professor at Korea University Business School, stated that this situation could represent Kakao’s “biggest crisis,” emphasizing the importance for remaining executives to demonstrate the company’s ability to operate effectively without its founder.