A South Korean billionaire and tech entrepreneur was detained on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech giant Kakao, has not been officially charged. The Seoul Southern District Court issued an arrest warrant, expressing concerns that he might flee the country or destroy evidence.
Kim has denied the allegations, asserting during a staff meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment amidst a takeover attempt last year, allegedly to thwart Hybe, another prominent K-pop agency, from acquiring it.
SM Entertainment and Hybe rank among South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges.
Founded by Kim in 2010 and based in Jeju City, Kakao has grown significantly, with Kim holding approximately a 24% stake in the company. In 2020, Kakao employed over 10,000 people and Kim was once recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock prices fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this crisis could be Kakao’s most significant challenge yet. “It would be the job of those who remain at the company to show that it can run well even with the founder not around,” he noted.