A South Korean billionaire and tech executive 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 technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him amid concerns that he might attempt to flee the country or destroy evidence.
“I firmly state that the allegations are not true. I have never instructed or condoned any illegal actions,” Kim remarked during a staff meeting at Kakao last week. The company described his arrest as “unfortunate.”
At 58 years old, Kim is accused of artificially inflating the stock of SM Entertainment during a takeover bid last year, allegedly as part of a plan to hinder Hybe, another prominent K-pop agency, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing popular acts like Aespa and BTS, respectively.
Kakao eventually secured the acquisition of SM Entertainment. Additionally, Kakao’s chief investment officer, Bae Jae-hyun, was indicted last year on similar stock manipulation allegations.
Founded in 2010 and based in Jeju City, Kakao saw Kim holding around a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, Kim was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this incident might represent “Kakao’s biggest crisis.”
“It will be up to those who remain at the company to demonstrate that it can operate effectively even in the absence of the founder,” he noted.