A prominent South Korean billionaire and technology entrepreneur was detained on Tuesday for allegedly engaging in stock price manipulation involving a major K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech giant Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court authorized his arrest amid concerns that he might flee the country or destroy evidence linked to the case.
“I have never instructed or condoned any illegal acts,” Kim stated during a recent meeting with Kakao staff, emphasizing his innocence. The company expressed regret over the situation, describing it as “unfortunate.”
The 58-year-old entrepreneur is accused of influencing the stock of SM Entertainment during a takeover attempt last year in a bid to thwart rival K-pop agency Hybe’s acquisition of the company.
SM Entertainment and Hybe represent two of South Korea’s largest K-Pop entities, with Aespa and BTS under their respective management.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, the company’s chief investment officer was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao, in which Kim holds a roughly 24% stake, employed over 10,000 individuals as of 2020. At one point, Kim was the wealthiest individual in South Korea, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock took a 5% hit on Tuesday.
Woochan Kim, a professor at the Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” noting that it will be essential for the remaining leadership to demonstrate the company’s resilience in the absence of its founder.