Who is Kim Beom-su, billionaire arrested for K-pop stock manipulation?
What's the story
Kim Beom-su, the billionaire founder of South Korean tech giant Kakao Corp, was arrested yesterday. He was held over accusations of stock price manipulation, during the acquisition of K-Pop agency SM Entertainment, in 2023. Kim is currently detained in a solitary cell at Seoul's Nambu Detention Centre. He has denied any wrongdoing, and Kakao called his arrest "unfortunate."
Legal troubles
Investigation into Kakao's acquisition of SM Entertainment
In March 2023, Kakao Corp acquired K-Pop agency SM Entertainment, after a takeover battle with BTS manager Hybe. Kim's arrest is linked to an investigation into potential illegalities committed by Kakao and its executives during the takeover. This acquisition happened two months after Kakao received a 1.2 trillion won investment from Saudi Arabia's Public Investment Fund and Singapore's GIC. In late 2023, South Korean prosecutors charged an executive for allegedly manipulating SM's stock price to obstruct Hybe from acquiring it.
Rags-to-riches
Journey from poverty to tech billionaire
Kim (58), a self-made billionaire, was born into poverty and rose to prominence as the founder of South Korea's first online game portal, Hangame, in 1998. A decade later, he and his partners launched the KakaoTalk app, which revolutionized mobile communication in the country. As of the first quarter of 2024, KakaoTalk is Korea's leading chat platform with 48 million monthly active users.
Business growth
Kakao Corp's expansion and dominance in South Korea
In 2014, Kakao merged with internet search portal operator Daum, valuing the company at about $3.1 billion. Since then, the tech giant has diversified into various services including games, advertising, music streaming, shopping, online banking, payments, and transport. The number of Kakao affiliates grew from 26 firms in 2014, to 124 companies in 2024 with assets worth $62 billion, as per South Korea's Fair Trade Commission.
Controversies
Kakao's monopolistic concerns and recent controversies
Kakao's mobility unit holds over 90% of South Korea's taxi-hailing market share, leading President Yoon Suk Yeol to label the service as monopolistic in November 2023. In October 2022, a data center fire disrupted some KakaoTalk services for several days, raising public concerns about the reliance of government agencies and private companies on the app.