A South Korean billionaire and tech entrepreneur was detained on Tuesday for allegedly manipulating 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, according to the New York Times. A Seoul Southern District Court authorized his arrest amid concerns from prosecutors that he might flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, as reported by the Times. The company described the arrest as “unfortunate.”
Kim, 58, is accused of distorting the stock of SM Entertainment during a takeover last year in a bid to block 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.
Ultimately, Kakao secured the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded by Kim in 2010 and based in Jeju City, Kakao employed over 10,000 individuals by 2020, and at one time, Kim was recognized as South Korea’s richest person, boasting an estimated net worth exceeding $13 billion.
Following the announcement of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this situation could be Kakao’s “biggest crisis.”
“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 remarked.