A prominent South Korean billionaire and tech entrepreneur was detained on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant to ensure his appearance, as prosecutors expressed concerns about the possibility of him fleeing the country or destroying evidence.
Kim stated during a Kakao staff meeting last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment during a takeover bid aimed at thwarting Hybe, another major K-pop agency, from acquiring the company. SM Entertainment and Hybe are among the largest K-pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao, based in Jeju City, in 2010 and holds approximately a 24% share in the company, which employed over 10,000 people by 2020. He was once considered the wealthiest individual in South Korea, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock declined by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis.” He emphasized that it would be essential for those who remain at the company to demonstrate its capability to operate effectively in the founder’s absence.