A South Korean billionaire and technology mogul has been arrested on allegations of stock price manipulation involving a prominent K-pop agency. Kim Beom-su, the founder of Kakao, was taken into custody after a warrant was issued by the Seoul Southern District Court amid concerns he might flee the country or destroy evidence.
Despite the arrest, Kim has not been formally charged and maintains his innocence, stating during a recent company meeting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao expressed disappointment over the situation, labeling the arrest as “unfortunate.”
The allegations against Kim stem from his purported involvement in manipulating the shares of SM Entertainment during a takeover last year, which was reportedly aimed at blocking rival company Hybe from acquiring the agency. Both SM Entertainment and Hybe are leading forces in the South Korean K-pop industry, with notable artists under their wings, including Aespa and BTS.
Kakao eventually succeeded in acquiring SM Entertainment, and this isn’t the first time the company has faced legal issues, as Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation last year.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people as of 2020, and Kim previously held the title of South Korea’s wealthiest individual, with his net worth exceeding $13 billion. Following the news of his arrest, Kakao’s stock price fell by 5%.
A business professor from Korea University suggested that this could represent Kakao’s “biggest crisis” and emphasized the need for the remaining leadership to demonstrate the company’s capability to thrive in Kim’s absence.