A billionaire from South Korea, Kim Beom-su, known for founding the tech company Kakao, was arrested on Tuesday under suspicion of manipulating the stock price of SM Entertainment, a major K-pop agency, during a takeover bid last year. Although he has not been formally charged, authorities issued an arrest warrant out of concern that he might flee the country or destroy evidence.
In a meeting at Kakao prior to his arrest, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao responded to the arrest by calling it “unfortunate.”
Kim, 58, is specifically accused of interfering with SM Entertainment’s stock to thwart another K-pop giant, Hybe, from acquiring it. SM Entertainment and Hybe are key players in the K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment in the previous year, but not without controversy; Bae Jae-hyun, the chief investment officer at Kakao, was indicted on charges of stock manipulation earlier.
Since its establishment in 2010 in Jeju City, Kakao has flourished under Kim’s leadership, with him owning approximately 24% of the company, which had more than 10,000 employees as of 2020. At one point, Kim was recognized as South Korea’s richest individual, boasting a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5%. Some analysts, like Woochan Kim from Korea University Business School, have suggested that this could represent a significant challenge for Kakao, emphasizing the need for the remaining leadership to demonstrate the company’s resilience in the absence of its founder.