A South Korean billionaire and tech entrepreneur has been detained on allegations of stock price manipulation involving a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of technology giant Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court has issued an arrest warrant to ensure his presence, as prosecutors expressed concerns that he might flee the country or destroy evidence.
During a staff meeting at Kakao last week, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company responded to the arrest by describing it as “unfortunate.”
The 58-year-old businessman is accused of manipulating the stock of SM Entertainment during last year’s takeover attempts, allegedly to obstruct rival K-pop agency Hybe from completing its acquisition.
SM Entertainment and Hybe are two of the largest K-Pop companies in South Korea, representing popular groups like Aespa and BTS, respectively. Ultimately, Kakao acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation accusations.
Founded in 2010, the company is based in Jeju City and had over 10,000 employees as of 2020. Kim Beom-su was once considered South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, commented that this could represent Kakao’s “biggest crisis,” emphasizing the importance for the remaining leaders to demonstrate the company’s stability in Kim’s absence.