A South Korean billionaire and tech entrepreneur has been detained on suspicions of manipulating stock prices linked to a prominent K-pop agency during a transaction that took place last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court amid concerns that he might flee the country or destroy evidence related to the allegations.
In a staff meeting at Kakao last week, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old businessman is accused of illicitly influencing the stock value of SM Entertainment during a takeover attempt, allegedly to hinder the acquisition by Hybe, another leading K-pop agency. SM Entertainment and Hybe represent some of South Korea’s most significant K-pop artists, including Aespa and BTS.
Kakao successfully acquired SM Entertainment, while last year, the company’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao was significantly bolstered by Kim, who held approximately 24% of the company’s shares and employed over 10,000 individuals as of 2020. Kim was once regarded as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
On Tuesday, Kakao’s stock fell by 5% following the news of Kim’s arrest. Woochan Kim, a professor at Korea University Business School, noted that this incident could represent Kakao’s “biggest crisis.” He emphasized the importance for the remaining leadership to demonstrate that the company can continue to thrive in Kim’s absence.