A South Korean billionaire and tech entrepreneur has been arrested for allegedly manipulating the stock price of a prominent K-pop agency during a takeover last year.
Kim Beom-su, the founder of Kakao, was taken into custody following an arrest warrant issued by the Seoul Southern District Court, which cited concerns that he might flee the country or destroy evidence. While he has not been formally charged, Kim maintains his innocence, asserting during a meeting at Kakao that he has never engaged in or endorsed illegal activities. Kakao described his arrest as “unfortunate.”
The 58-year-old businessman is accused of overseeing stock manipulation of SM Entertainment to prevent another K-pop powerhouse, Hybe, from acquiring the company. SM Entertainment and Hybe are two of South Korea’s leading K-pop agencies, representing popular groups Aespa and BTS, respectively.
Kakao successfully completed its acquisition of SM Entertainment, but the controversy continues as Bae Jae-hyun, Kakao’s chief investment officer, was also indicted for stock manipulation last year.
Founded in 2010 and based in Jeju City, Kakao, in which Kim holds roughly a 24% stake, employed over 10,000 individuals as of 2020. At one time, he was the wealthiest person in South Korea, with his net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock value fell by 5%. According to Woochan Kim, a professor at Korea University Business School, this incident could represent Kakao’s most significant crisis. He emphasized that it would be up to the remaining leadership to demonstrate that the company can thrive without its founder.