A prominent South Korean billionaire and tech entrepreneur has been detained for allegedly manipulating the stock prices of a major K-pop agency during a deal last year.
Kim Beom-su, 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 amid concerns from prosecutors that he may attempt to flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao, adding that the allegations are false. The company described the arrest as “unfortunate.”
Kim, aged 58, is accused of engaging in stock manipulation involving SM Entertainment during a takeover bid last year, allegedly to hinder rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe are two of South Korea’s largest K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, Bae Jae-hyun, the chief investment officer of Kakao, was also indicted on charges of stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao is a significant tech player, with Kim owning approximately 24% of the company. It employed over 10,000 people as of 2020, and Kim has held the title of South Korea’s richest individual, with a net worth exceeding $13 billion.
In response to the news of his arrest, Kakao’s stock fell by 5% on Tuesday. Professor Woochan Kim from Korea University Business School remarked that this situation could represent “Kakao’s biggest crisis.” He emphasized that it would be vital for the remaining executives to demonstrate the company’s resilience and ability to operate effectively without its founder.