A South Korean billionaire and tech entrepreneur, Kim Beom-su, was arrested on Tuesday amid allegations of stock price manipulation related to a significant K-pop agency. He is the founder of Kakao, a prominent technology firm. Although Kim has not yet been formally charged, the Seoul Southern District Court issued an arrest warrant due to concerns that he might evade justice or destroy potential evidence.
In a recent staff meeting, Kim defended himself, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate,” reflecting the company’s concern over the situation.
The accusations stem from events during a takeover last year when Kim allegedly manipulated the stock of SM Entertainment to thwart a potential acquisition by rival K-pop agency Hybe. This incident is part of an ongoing feud between SM Entertainment, known for managing groups like Aespa, and Hybe, home to global sensation BTS.
Kakao ultimately completed its acquisition of SM Entertainment, a move that followed the indictment of Kakao’s chief investment officer, Bae Jae-hyun, on similar stock manipulation charges last year.
Kim, who co-founded Kakao in 2010, played a significant role in its growth and innovation, with the company employing over 10,000 people by 2020. At one point, he was regarded as South Korea’s richest individual, with a net worth exceeding $13 billion. Following news of his arrest, Kakao’s stock experienced a 5% decline.
Experts, such as Woochan Kim from Korea University Business School, note that this could represent a critical challenge for Kakao. He emphasized that it will now be pivotal for the remaining leadership at Kakao to demonstrate the company’s resilience in the absence of its founder.
While the developments surrounding Kim Beom-su’s arrest are serious, they also present an opportunity for Kakao to prove its stability and adaptability as a leading technology firm in a rapidly changing industry. With strong leadership and a committed workforce, Kakao can not only navigate this crisis but also continue to thrive and innovate moving forward.