A South Korean billionaire and technology entrepreneur has been arrested for allegedly manipulating the stock market of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant amid concerns that he may flee the country or destroy evidence. Kim has denied the allegations, stating during a recent staff meeting at Kakao that he has never endorsed or participated in any illegal activities. The company described the arrest as “unfortunate.”
The accusations allege that Kim manipulated the stock of SM Entertainment during a takeover bid last year to hinder Hybe, another significant K-pop agency, from acquiring it. Both SM Entertainment and Hybe are among South Korea’s leading K-pop companies, with SM representing artists like Aespa and Hybe representing BTS.
Kakao eventually succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, and as of 2020, the company employed over 10,000 people and had a valuation reflecting his estimated net worth exceeding $13 billion. Following news of Kim’s arrest, Kakao’s stock plummeted by 5 percent.
Woochan Kim, a business professor at Korea University, remarked that this could be Kakao’s “biggest crisis,” emphasizing that the remaining leadership will need to demonstrate that the company can operate effectively in Kim’s absence.