A South Korean billionaire and tech entrepreneur has been arrested on allegations of manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of technology company Kakao, was taken into custody after the Seoul Southern District Court issued an arrest warrant amid concerns that he might flee the country or destroy evidence. Although he has not been formally charged, Kim has maintained his innocence, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.”
Kakao described the arrest as “unfortunate.” Kim, aged 58, is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart rival K-pop agency Hybe from acquiring the company.
SM Entertainment and Hybe are among South Korea’s leading K-pop firms, representing popular groups Aespa and BTS, respectively. Kakao successfully acquired SM Entertainment in the end, despite the controversies surrounding the deal. Last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao, in which Kim holds approximately a 24% stake, had over 10,000 employees as of 2020. He has been recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, suggested this could be Kakao’s “biggest crisis,” emphasizing that it will be crucial for the remaining leadership to demonstrate that the company can continue to operate effectively in Kim’s absence.