A South Korean billionaire and technology leader was detained on Tuesday for allegedly manipulating the stock prices of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been officially charged, according to reports. An arrest warrant issued by the Seoul Southern District Court indicates concerns from prosecutors that he may attempt to flee the country or destroy evidence.
“I have never directed or approved any illegal actions,” Kim stated at a Kakao staff meeting last week. The company described the arrest as “unfortunate.”
The 58-year-old is accused of tampering with the stock of SM Entertainment during a takeover bid last year to obstruct rival Hybe, another leading K-pop agency, from purchasing it.
Both SM Entertainment and Hybe are significant players in the South Korean K-Pop industry, being home to popular groups like Aespa and BTS, respectively.
Kakao eventually took over SM Entertainment. In the previous year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a major tech firm, with Kim holding approximately a 24% stake. The company employed over 10,000 individuals in 2020, and at one time, Kim was recognized as South Korea’s wealthiest individual with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, noted this situation could represent “Kakao’s biggest crisis.”
“It will be the responsibility of those who remain at the company to demonstrate that it can continue to operate successfully even in the absence of the founder,” he added.