A billionaire and technology entrepreneur from South Korea was detained on Tuesday on allegations of manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech giant Kakao, has not yet been formally charged. According to reports, the Seoul Southern District Court has issued an arrest warrant for him, with prosecutors concerned that he may attempt to flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a company meeting at Kakao last week. The company expressed its disappointment over the arrest.
At 58 years old, Kim is accused of tampering with the stock of SM Entertainment during last year’s takeover process, allegedly to hinder Hybe, another significant player in the K-pop industry, from securing the acquisition.
SM Entertainment and Hybe are two leading K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao managed to acquire SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, with its headquarters in Jeju City. He holds approximately a 24% stake in the company, which employed over 10,000 individuals in 2020. At one time, Kim was recognized as the wealthiest person in South Korea, with an estimated fortune exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday.
According to Woochan Kim, a professor at Korea University Business School, this situation may represent Kakao’s “biggest crisis.” He emphasized the need for those remaining at the company to demonstrate its capability to operate efficiently even in the absence of its founder.