A prominent South Korean billionaire and tech executive was detained on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not faced formal charges yet, according to reports. The Seoul Southern District Court issued an arrest warrant for his apprehension due to 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. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover last year as part of an effort to hinder rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively. Ultimately, Kakao successfully acquired SM Entertainment, but last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Kim founded Kakao in 2010, which is based in Jeju City. He holds about a 24% stake in the company, which employed over 10,000 individuals in 2020. At one point, Kim was considered South Korea’s wealthiest person, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing that it will be crucial for those remaining at the company to demonstrate its ability to operate effectively without its founder.