Media caption The captain sank seconds after a collision with another vessel
The captain of a vessel collapsing with a boat on the Danube river in Budapest
The 64-year-old Ukrainian national was held as a suspect of reckless misconduct in waterborne traffic leading to mass casualties.
The South Korean tourists sank seven seconds after the collision on Wednesday.
A criminal investigation has been launched in the collision, a
CCTV footage showed.
Witness saw people screaming in the water. [1
9659909] CCTV footage showed The boat that sank – Hableany, or Mermaid – Viking Sigyn – near the Margit (Margaret) Bridge in central Budapest after 21:00 local time (19:00 GMT).
"The whole thing happened very quickly," said Clay Findley, a US tourist who was on the Viking Sigyn.
"I thought I was going to miss it, but the front of the Viking hit the back of just a few seconds later, and then it down. "
Another passenger, 66-year-old Ginger Brinton from the US, told the AFP news agency that he was on the boat's balcony when he saw people in the water, screaming for help.
He added: " It was just terrible. "
No-one on the Swiss-registered Viking Sigyn was injured.
Police said the investigation yielded Evidence that raised questions of personal responsibility so […] from the Hableany, a double-decker.
Emergency crews found the wreckage of the Hableany, a double-decker
Thirty South Korean tourists on the riverbank near the Margaret Bridge well as two Hungarian crew, were on board the Hableany.
Most of the Tourists were aged between 40 and 50 but the group included a six-year-old child and a man in his 70s.
The seven rescued alive included a 31-year-old old woman named as Yoon, said: "The boat flipped instantly and capsized."
The rescue operation continued with boats, divers, spotlights, and radar scanning along the river, where the temperature of the water between 10C and 12C (50F-54F).
But teams warned that, as more time passed
The seven confirmed victims were not wearing life jackets and three of them were found several kilometers from the site of the collision, police said
By Nick Thorpe, BBC News, Budapest
There has been a recent increase in traffic in recent years.  Andras Kurbely, 27 years of experience on the Danube, told the BBC that this was an accident he and others have long worried about.
In his view, the practice of the river cruisers, which is much more powerful and harder to manoeuvre, "carving a route between so many smaller boats."
sail up and down the river between the five main bridges as an after-dinner excursion for their passengers, should be stopped.
South Korea's Foreign Minister Kang Kyung-wha and other officials and rescue teams left for Budapest on Thursday.
Earlier, flowers were laid outside the country's embassy in Budapest and candles were lit on the Danube bank.
Earlier, South Korean President Moon Jae-in said he was planning a government "
For South Koreans, the sinking is a painful reminder of the Sewol disaster in 2014, the BBC's Laura Bicker in Seoul reports.
The ferry of that name sank off South Korea's Jindo island, killing 304 people, almost all of them schoolchildren on a trip. The ship's captain was later convicted of murder.