A South Korean billionaire and tech entrepreneur was detained on Tuesday for allegedly influencing the stock price of a major K-pop agency during a transaction last year.
Kim Beom-su, founder of the technology giant Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence.
Kim asserted in a recent staff meeting at Kakao that the allegations are unfounded, stating, “I have never instructed or condoned any illegal acts.” The company expressed that the arrest is “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment last year as part of a scheme designed to thwart rival K-pop agency Hybe from acquiring the company.
SM Entertainment and Hybe are among South Korea’s leading K-pop firms, representing popular artists such as Aespa and BTS.
Kakao eventually successfully acquired SM Entertainment. Last year, the chief investment officer at Kakao, Bae Jae-hyun, was also indicted for stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a significant player in the tech industry, with Kim owning approximately a 24% stake in the company. In 2020, it employed over 10,000 people and at one time, Kim was the wealthiest individual in South Korea, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock experienced a 5% decline on Tuesday.
Woochan Kim, a professor at Korea University Business School, mentioned that this could be Kakao’s “biggest crisis,” emphasizing that it will be crucial for the remaining leadership to demonstrate that the company can operate effectively without its founder.