A South Korean billionaire and tech entrepreneur, Kim Beom-su, was arrested on Tuesday for allegedly manipulating the stock price of a major K-pop agency during a takeover last year. Kim, the founder of Kakao, has not yet been formally charged. The arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company referred to his arrest as “unfortunate.”
Kim, 58, is accused of manipulating the stock of SM Entertainment in order to prevent its acquisition by Hybe, another leading K-pop agency. Both SM Entertainment and Hybe are prominent players in the K-pop industry, representing popular groups such as Aespa and BTS, respectively.
Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, and he held about a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one point, he was the wealthiest person in South Korea, with an estimated 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, remarked that this might be Kakao’s “biggest crisis,” emphasizing the importance of the remaining leadership in demonstrating that the company can effectively operate without its founder.