A prominent South Korean billionaire and tech entrepreneur, Kim Beom-su, was apprehended on Tuesday for allegedly engaging in stock price manipulation involving a major K-pop agency during a transaction last year.
Kim, the founder of tech giant Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant amid concerns from prosecutors that he might flee the country or destroy evidence.
In response to the allegations, Kim remarked during a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover bid last year, attempting to thwart another leading K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are among South Korea’s largest K-pop companies, representing popular groups Aespa and BTS respectively. Ultimately, Kakao secured the acquisition of SM Entertainment. Notably, last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Having founded Kakao in 2010 in Jeju City, Kim holds approximately a 24% stake in the company, which employed over 10,000 individuals as of 2020. He was once regarded as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the announcement of Kim’s arrest, Kakao’s stock plummeted by 5%.
Woochan Kim, a professor at Korea University Business School, commented that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate that the company can thrive without its founder’s presence.