A South Korean billionaire and tech entrepreneur was detained on Tuesday under allegations of stock price manipulation involving a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has yet to face formal charges, but a warrant for his arrest was issued by the Seoul Southern District Court over concerns that he could flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company has described his arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover last year to thwart Hybe, another leading K-pop agency, from acquiring it. Both SM Entertainment and Hybe are key players in the K-pop industry, representing popular groups such as Aespa and BTS.
Kakao eventually completed the acquisition of SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010 in Jeju City and holds approximately a 24% stake in the company, which employed over 10,000 people in 2020. He was previously recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing that it is essential for the remaining leadership to demonstrate the company’s capability to operate effectively without its founder.