A South Korean billionaire and technology entrepreneur was detained on Tuesday under allegations of stock manipulation involving a prominent K-pop company during last year’s acquisition negotiations.
Kim Beom-su, the founder of Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court has authorized his arrest due to concerns that he might attempt to flee the country or destroy evidence.
In a recent meeting at Kakao, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao labeled the arrest as “unfortunate.”
The 58-year-old businessman is accused of influencing the stock of SM Entertainment during a takeover last year to thwart Hybe, another leading K-pop agency, from purchasing it. SM Entertainment and Hybe are among the largest K-Pop firms in South Korea, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao went ahead with the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer was also charged in connection with stock manipulation.
Founded in 2010 and based in Jeju City, Kakao was significantly impactful, employing over 10,000 people as of 2020, with Kim holding approximately a 24% stake in the company. At one time, Kim was recognized as South Korea’s wealthiest individual, boasting an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. According to Woochan Kim, a professor at Korea University Business School, this situation could represent Kakao’s “biggest crisis.” He added that it will be up to the remaining leadership at Kakao to demonstrate the company’s ability to operate effectively without its founder.