A South Korean billionaire and technology entrepreneur was detained on Tuesday for allegedly manipulating the stock prices of a prominent K-pop agency during a takeover bid last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant for his custody, as prosecutors express concerns that he may attempt to flee the country or destroy evidence.
Kim stated in a staff meeting at Kakao last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment during a takeover last year to thwart competition from Hybe, another significant K-pop agency.
SM Entertainment and Hybe are two leading companies in South Korea’s K-Pop industry, associated with popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also charged with stock manipulation.
Founded in 2010 and based in Jeju City, Kakao, in which Kim holds about a 24% stake, employed over 10,000 people in 2020. At one time, Kim was South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the announcement 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,” suggesting that it will be up to the remaining executives to prove the company can operate effectively in the founder’s absence.