A South Korean billionaire and tech magnate, Kim Beom-su, was arrested on Tuesday for allegedly manipulating the stock price of SM Entertainment, a major K-pop agency, during a takeover bid last year. Kim, the founder of technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant over concerns that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old Kim is accused of engaging in activities to interfere with the acquisition of SM Entertainment by Hybe, another significant K-pop agency. SM Entertainment and Hybe represent two of South Korea’s largest K-Pop brands, Aespa and BTS, respectively.
Kakao eventually went on to acquire SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted for stock manipulation.
Kim founded Kakao in 2010, and he held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
In response to the news of his arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, commented that this situation could represent Kakao’s “biggest crisis,” emphasizing the importance for the remaining management to demonstrate that the company can continue to operate effectively without its founder.