A prominent South Korean billionaire and tech executive was detained on Tuesday for allegedly manipulating stock prices of a leading K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him due to concerns that he might flee the country or destroy evidence related to the case.
In a recent staff meeting at Kakao, Kim stated, “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 entrepreneur is suspected of interfering with the stock of SM Entertainment amid a takeover attempt last year, aiming to block Hybe, another significant K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop firms in South Korea, representing popular groups such as Aespa and BTS.
Kakao eventually succeeded in purchasing SM Entertainment. Last year, Bae Jae-hyun, the chief investment officer of Kakao, was also indicted on stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao has seen its workforce exceed 10,000 as of 2020, with Kim holding approximately a 24% stake in the company. At one point, he was recognized as the richest individual in South Korea, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock experienced a 5% decline on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.” He emphasized that it would be up to the remaining leadership to demonstrate that the company can operate effectively without its founder.