A South Korean billionaire and tech entrepreneur has been arrested for allegedly manipulating the stock price of a prominent K-pop agency during a takeover bid last year.
Kim Beom-su, the founder of the technology firm Kakao, was taken into custody after a warrant was issued by the Seoul Southern District Court. Prosecutors expressed concerns that he might flee the country or destroy evidence. While he has not been formally charged, Kim has denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent meeting at Kakao. The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment to thwart Hybe, another leading K-pop agency, from acquiring it. SM Entertainment and Hybe are two of the largest K-Pop companies in South Korea, representing the popular groups Aespa and BTS, respectively.
Kakao eventually took over SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao saw Kim hold about a 24% stake in the company, which employed over 10,000 people as of 2020. Kim was once deemed South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion. Following news of his arrest, Kakao’s stock dropped by 5%.
According to Woochan Kim, a professor at Korea University Business School, this incident could represent Kakao’s “biggest crisis.” He emphasized that it will be crucial for the remaining leadership to demonstrate that the company can continue to operate effectively even in the founder’s absence.