A South Korean billionaire and tech entrepreneur was detained on Tuesday for allegedly manipulating the stock prices of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant citing concerns that he might attempt to flee the country or obstruct the investigation.
Kim has denied the allegations, stating at a staff meeting last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of influencing the stock price of SM Entertainment during a takeover attempt last year, allegedly attempting to thwart rival K-pop agency Hybe from acquiring the company.
SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao went on to acquire SM Entertainment. Additionally, last year, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on charges of stock manipulation.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people in 2020. At one point, he was regarded as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the arrest news, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, commented that this could be Kakao’s “biggest crisis,” noting, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”