A prominent South Korean billionaire and tech entrepreneur, Kim Beom-su, was arrested on Tuesday for allegedly manipulating the stock price of SM Entertainment, a major K-pop agency, during a takeover attempt last year. Kim, the founder of the technology firm Kakao, has not yet been formally charged, but the Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
During a recent staff meeting at Kakao, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of artificially affecting the stock value of SM Entertainment to thwart a takeover bid from rival K-pop agency, Hybe. Both SM Entertainment and Hybe are among the largest K-pop firms in South Korea, representing popular groups such as Aespa and BTS.
Kakao successfully acquired SM Entertainment last year, and Kim’s chief investment officer, Bae Jae-hyun, was also indicted last year on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people and has Kim holding approximately a 24% stake in the company. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated wealth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock experienced a 5% decline. Woochan Kim, a professor at Korea University Business School, commented that this incident could represent “Kakao’s biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company can function effectively without its founder.