A South Korean billionaire and tech entrepreneur was detained on Tuesday for allegedly inflating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court granted an arrest warrant due to concerns that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting last week. Kakao described his arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment amidst a takeover bid last year to undermine a competing acquisition by Hybe, another major K-pop firm.
Both SM Entertainment and Hybe are significant players in South Korea’s K-pop industry, representing popular acts like Aespa and BTS, respectively. Kakao eventually secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer was also indicted on related stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a major tech company where Kim holds about a 24% stake. As of 2020, the company employed over 10,000 people, and Kim was once recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. A professor at Korea University Business School noted that this situation could represent Kakao’s most significant crisis, emphasizing the need for remaining executives to demonstrate that the company can operate effectively without its founder.