A South Korean billionaire and tech entrepreneur 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 authorized an arrest warrant out of concerns that he might flee the country or destroy evidence.
In a recent staff meeting, Kim denied the allegations, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao labeled the arrest as “unfortunate.”
Kim, 58, is suspected of influencing the stock of SM Entertainment during a takeover attempt last year, which was part of a strategy to obstruct another major K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing popular acts Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, while last year, Kakao’s chief investment officer, Bae Jae-hyun, was also charged with stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a significant player in the tech industry, with Kim holding approximately a 24% stake in the company. In 2020, it employed over 10,000 people. Kim was once regarded as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock dropped by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, stated that this incident could represent Kakao’s “biggest crisis.” He emphasized that it would be crucial for the remaining team at Kakao to demonstrate that the company can function effectively without its founder.