A billionaire and tech entrepreneur from South Korea, Kim Beom-su, was detained on Tuesday over allegations of stock price manipulation involving a prominent K-pop agency during a transaction last year.
Kim, the founder of the technology firm Kakao, has yet to face formal charges as reported by the New York Times. An arrest warrant was issued by the Seoul Southern District Court, with concerns raised by prosecutors that he might flee the country or tamper with evidence.
“I firmly deny the allegations. I have never authorized or permitted any illegal activities,” Kim stated in a company meeting last week, as reported by the Times. Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of engaging in actions to manipulate the stock of SM Entertainment during a takeover bid last year, intended to thwart rival K-pop agency Hybe’s acquisition efforts.
SM Entertainment and Hybe are two of South Korea’s leading K-pop giants, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao had more than 10,000 employees in 2020, with Kim owning approximately 24% of the company’s shares. At one time, he was the richest person in South Korea, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock price fell by 5%.
Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis.” He emphasized the responsibility of remaining leadership to demonstrate that the company can operate effectively without its founder.