A prominent South Korean billionaire and tech entrepreneur, Kim Beom-su, was arrested on Tuesday due to allegations of stock price manipulation linked to a major K-pop agency deal last year. Kim, the founder of the technology firm Kakao, has not yet been formally charged. His arrest warrant was issued by the Seoul Southern District Court over concerns that he might flee the country or destroy evidence.
In response to the accusations, Kim stated during a Kakao staff meeting last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has characterized his arrest as “unfortunate.”
Kim, who is 58 years old, is accused of manipulating the stock of SM Entertainment to thwart a takeover by Hybe, another major player in the K-pop industry. Both SM Entertainment and Hybe are significant companies in South Korea’s music scene, representing famous acts like Aespa and BTS.
Kakao eventually took over SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao, where Kim holds approximately a 24% stake, employed over 10,000 individuals as of 2020. At one point, Kim was regarded as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation might pose Kakao’s “biggest crisis” and emphasized the need for the remaining leadership to demonstrate the company’s stability in Kim’s absence.