A South Korean billionaire and tech entrepreneur, Kim Beom-su, was arrested on Tuesday over allegations of stock price manipulation involving a prominent K-pop agency during last year’s acquisition attempt. Kim, the founder of the technology firm Kakao, has not faced formal charges, but the Seoul Southern District Court issued an arrest warrant, citing concerns that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim denied the allegations, asserting that he has never supported or engaged in any illegal activities. Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of attempting to manipulate the stock of SM Entertainment as part of a strategy to thwart rival K-pop agency Hybe from purchasing the company. SM Entertainment and Hybe are two leading players in the South Korean music industry, managing popular groups like Aespa and BTS.
Eventually, Kakao succeeded in acquiring SM Entertainment. This arrest follows another case last year where Kakao’s chief investment officer, Bae Jae-hyun, was indicted for stock manipulation.
Kim founded Kakao in 2010, holding around a 24% stake in the company, which employed over 10,000 people as of 2020. At one time, he was regarded as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock experienced a 5% decline. Woochan Kim, a professor at Korea University Business School, remarked that this incident might represent the greatest challenge for Kakao, emphasizing the importance for the remaining leadership to demonstrate that the company can continue to operate effectively without its founder.