A South Korean billionaire and technology executive was detained on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant for him, citing concerns that he might leave the country or destroy evidence.
Kim stated during a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company expressed that his arrest was “unfortunate.”
The 58-year-old entrepreneur reportedly manipulated the stock of SM Entertainment in an effort to thwart Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe are major players in South Korea’s K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually took over SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim, who established Kakao in 2010, holds about a 24% stake in the company, which employed over 10,000 individuals in 2020. At one stage, he was considered South Korea’s richest person, with an estimated net worth exceeding $13 billion.
Following the announcement of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, suggested that this situation could represent Kakao’s “biggest crisis,” emphasizing that it would now be essential for remaining executives to demonstrate that the company can continue to operate effectively without its founder.