A South Korean billionaire and notable tech entrepreneur, Kim Beom-su, was taken into custody on Tuesday amid allegations of stock price manipulation related to a significant K-pop agency acquisition last year.
Kim, the founder of the technology giant Kakao, has not faced formal charges at this point. The arrest warrant was issued by the Seoul Southern District Court, prompted by concerns from prosecutors regarding the possibility of him fleeing the country or destroying evidence.
In a recent staff meeting, Kim firmly denied the allegations, insisting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has expressed disappointment regarding the arrest, labeling it as “unfortunate.”
The accusations stem from Kim’s alleged involvement in manipulating the stock of SM Entertainment, a major player in the K-pop scene, to thwart a takeover by another prominent agency, Hybe. SM Entertainment represents major artists like Aespa, while Hybe is known for its connection to BTS, further highlighting the competitive landscape of South Korea’s entertainment industry.
Kakao had successfully acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, faced similar charges concerning stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao has become a significant player in the tech sector, employing over 10,000 people as of 2020. At his peak, Kim was ranked as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion. Following the news of his arrest, Kakao’s stock fell by 5%, raising concerns among investors.
According to Woochan Kim, a professor at Korea University Business School, this situation may pose Kakao’s greatest challenge to date. He noted that it is now crucial for the remaining leadership to demonstrate the company’s ability to thrive in Kim’s absence.
This unfolding situation underscores the volatile intersection of technology, finance, and entertainment in South Korea. As the company navigates this crisis, there remains hope that Kakao can emerge stronger. The significant public interest in K-pop and its international fame could offer resilience and avenues for recovery as the industry adapts to these challenges.