A South Korean billionaire and technology entrepreneur has been arrested for allegedly inflating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, was taken into custody under an arrest warrant issued by the Seoul Southern District Court. Prosecutors expressed concern that he might flee the country or destroy evidence before facing charges. Although he has not been formally charged, Kim has vehemently denied the allegations, asserting that he has never authorized or supported any illegal activities. Kakao described the situation as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment in an effort to thwart a takeover by another major K-pop agency, Hybe. SM Entertainment and Hybe are among the leading K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Kakao ultimately secured the acquisition of SM Entertainment, but last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted for stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a major tech company where Kim holds approximately 24% of shares. As of 2020, it employed over 10,000 individuals and at one time made Kim South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock experienced a 5% decline on Tuesday. Woochan Kim, a professor at Korea University Business School, indicated that this may represent a significant crisis for Kakao, emphasizing the need for the company’s remaining leadership to demonstrate its viability without the founder’s presence.