A South Korean billionaire and technology entrepreneur was detained on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency in connection with a deal from the previous 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 from prosecutors that he might flee the country or obstruct the investigation.
In a staff meeting at Kakao last week, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
Kim, who is 58 years old, is accused of manipulating the stock of SM Entertainment during a takeover last year, part of an effort to thwart Hybe, another significant K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop companies, representing popular groups Aespa and BTS, respectively.
Kakao eventually secured the acquisition of SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kim’s company had more than 10,000 employees by 2020, and he has held approximately a 24% stake. At one time, he was considered South Korea’s richest individual, with an estimated fortune exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, stated that this situation could represent Kakao’s “biggest crisis.”
He emphasized that it will be crucial for the remaining leadership at the company to demonstrate its continued viability in Kim’s absence.