A South Korean billionaire and technology entrepreneur was detained on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been formally charged. The Seoul Southern District Court has issued an arrest warrant for him, citing concerns that he might flee the country or destroy evidence, according to reports.
Kim, 58, has denied the allegations, asserting during a staff meeting at Kakao last week that he has never authorized or endorsed any illegal activities. The company described the arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment in a scheme last year aimed at hindering a rival K-pop agency, Hybe, from acquiring the company. SM Entertainment and Hybe are two of South Korea’s largest K-pop entities, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao completed its acquisition of SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges.
Kim launched Kakao, headquartered in Jeju City, in 2010. He held a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one point, he was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could be Kakao’s “biggest crisis,” emphasizing the importance for remaining leadership to demonstrate the company’s ability to operate effectively without its founder.