A billionaire South Korean tech entrepreneur was detained on Tuesday for allegedly engaging in stock manipulation involving 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 with any crime, according to a report by the New York Times. The Seoul Southern District Court approved an arrest warrant to bring him into custody amid concerns that he might attempt to flee the country or destroy evidence.
“I did not instruct or endorse any illegal activities. The allegations are false,” Kim stated during a company meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old businessman is accused of influencing the stock of SM Entertainment during a takeover bid last year, allegedly as part of a plot to thwart rival agency Hybe from acquiring it.
SM Entertainment and Hybe are two of South Korea’s most significant K-Pop companies, managing notable groups Aespa and BTS, respectively.
Kakao ultimately completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun faced similar stock manipulation charges.
Kim started Kakao, based in Jeju City, in 2010. He reportedly held around a 24% stake in the company, which had over 10,000 employees in 2020. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price dropped by 5% on Tuesday.
Woochan Kim, a business professor at Korea University, remarked that this might represent Kakao’s “biggest crisis.” He emphasized that it would now be essential for remaining executives to demonstrate the company’s ability to operate effectively without its founder.