A prominent South Korean billionaire and tech entrepreneur, Kim Beom-su, was taken into custody on Tuesday for allegedly engaging in stock price manipulation related to a significant K-pop agency acquisition last year. Kim, the founder of the technology giant Kakao, is facing scrutiny after a court in Seoul issued an arrest warrant due to concerns he might flee the country or tamper with evidence.
In a recent staff meeting at Kakao, Kim denied the allegations, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the situation as “unfortunate” and expressed their commitment to transparency and integrity.
Kim, who is 58 years old, stands accused of manipulating the stock of SM Entertainment to thwart a takeover bid by rival agency Hybe, while Kakao ultimately acquired SM Entertainment. Both agencies represent top K-pop groups, with SM Entertainment associated with Aespa and Hybe known for BTS. The arrest follows a similar indictment of Kakao’s chief investment officer, Bae Jae-hyun, for stock manipulation charges last year.
Founded in 2010, Kakao has grown significantly, employing over 10,000 individuals as of 2020, and at one point, Kim was recognized as South Korea’s richest individual with a net worth surpassing $13 billion. Following Kim’s arrest, Kakao’s stock price dropped by 5%.
Woochan Kim, a business professor at Korea University, indicated that this could be Kakao’s most significant challenge to date, suggesting that the responsibility now lies with the remaining leadership to maintain the company’s stability and operations without its founder.
In light of this incident, Kakao and its leadership face a critical moment to demonstrate resilience and uphold the company’s reputation. The situation also underscores the importance of corporate governance and ethical practices in fast-growing sectors such as technology and entertainment. As the fallout from this development unfolds, stakeholders will be watching closely to see how Kakao navigates these turbulent waters and preserves its standing in the competitive K-pop landscape.