A South Korean billionaire and technology 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 tech company 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, in a recent staff meeting, maintained his innocence, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover bid last year, purportedly to thwart another major K-pop agency, Hybe, from purchasing it.
SM Entertainment and Hybe represent two of South Korea’s largest K-pop firms, managing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar charges related to stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao was led by Kim, who held approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was the richest individual in South Korea, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s capacity to function effectively in Kim’s absence.