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 tech giant Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, emphasizing that the allegations are false. The company expressed that Kim’s arrest was “unfortunate.”
Kim, 58, is suspected of manipulating the stock of SM Entertainment in an effort to thwart a takeover attempt by Hybe, another major player in the K-pop industry.
Both SM Entertainment and Hybe rank among the largest K-pop agencies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao eventually finalized its acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao, in which Kim holds approximately a 24% stake, employed over 10,000 individuals as of 2020. At one point, Kim was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock experienced a 5% decline on Tuesday.
Woochan Kim, a professor at Korea University Business School, indicated that this could represent “Kakao’s biggest crisis.” He added, “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.”