A South Korean billionaire and technology leader 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, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant to ensure he is held in custody due to concerns that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts. The allegations are not true,” Kim stated in a recent staff meeting at Kakao. The company described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, with the alleged intent to thwart another major K-pop agency, Hybe, from purchasing it.
SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing artists like Aespa and BTS, respectively.
Ultimately, Kakao succeeded in acquiring SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people, with Kim holding approximately a 24% stake in the company. He was formerly recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
In response to the arrest news, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing the importance of the remaining leadership in demonstrating that the company can operate effectively without its founder.