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 the technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him out of concerns that he might flee the country or destroy evidence.
Kim publicly denied the allegations during a staff meeting at Kakao last week, stating, “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 amid a takeover last year, in an effort to obstruct Hybe, another significant K-pop agency, from acquiring it.
Both SM Entertainment and Hybe are major players in the K-pop industry, representing popular groups like Aespa and BTS.
Ultimately, Kakao completed its acquisition of SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted for similar stock manipulation charges.
Kim launched Kakao in 2010, and the company, based in Jeju City, reported having over 10,000 employees in 2020. At one time, he was recognized as South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock dropped 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing that it will be up to the remaining company leadership to demonstrate effective management in the absence of the founder.