A South Korean billionaire and technology 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 firm Kakao, has not yet been formally charged, according to the New York Times. The Seoul Southern District Court issued a warrant for his arrest due to concerns that he might flee the country or destroy evidence.
Kim has publicly denied the allegations, stating during a recent staff meeting at Kakao that he has never directed or supported any illegal activities. The company described his arrest as “unfortunate.”
The 58-year-old is accused of engaging in stock manipulation related to SM Entertainment as part of a scheme to thwart another major K-pop agency, Hybe, from acquiring the company. SM Entertainment and Hybe are two of the largest K-pop labels in South Korea, representing popular artists Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, while last year Kakao’s chief investment officer Bae Jae-hyun was indicted on similar stock manipulation charges.
Kim founded Kakao in 2010, with its headquarters located in Jeju City. He reportedly holds a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was considered South Korea’s wealthiest individual, with an estimated fortune exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s most significant challenge yet, noting that it will be the responsibility of those remaining at the company to demonstrate that it can successfully operate without the founder’s presence.