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Kakao Corp. founder Kim Beom-su was arrested Tuesday<\/a> in Seoul, South Korea. That might not mean much to Westerners, but the story is a bizarre tale of how a celebrated, self-made tech billionaire fell from grace… partly because he bought a scandal-ridden K-pop agency.<\/p>\n<\/div>\n Kim, who also goes by Brian, stands accused of manipulating SM Entertainment\u2019s stock price during a high-profile acquisition battle. Kim\u2019s chief rival in the bidding war? Hybe, the K-pop label that is best known for BTS. Prosecutors indicted Kakao\u2019s chief investment officer, Bae Jae-hyun<\/a>, last year on similar charges. Kim has denied any wrongdoing.<\/p>\n<\/div>\n To back it up a bit, Kakao Corp. is best known for KakaoTalk, South Korea\u2019s most popular messaging app, used by roughly 47 million of the country\u2019s 50 million people<\/a>. You could describe it as Korea\u2019s WhatsApp, but Kakao isn\u2019t a platform just for messaging. The company has dozens of affiliates that handle everything from shopping and banking to music and ridehailing. Currently, the company\u2019s valued at roughly 17 trillion Korean won, or $12.4 billion USD.<\/p>\n<\/div>\n If Kakao was already so dominant, you might wonder why the company would allegedly risk financial crimes to acquire a K-pop company. But SM Entertainment isn\u2019t just some label. It\u2019s one of the big three K-pop agencies responsible for hit acts like Girls\u2019 Generation, Exo, NCT, and Aespa. <\/p>\n<\/div>\n Symbolically, Kim\u2019s arrest matters because, among Korea\u2019s elite, he is the rare example of a self-made billionaire. In other words, he\u2019s not from a chaebol. In Korea, chaebols are family-run conglomerates like Samsung, Hyundai, SK Group, and LG. These chaebols dominate South Korea\u2019s economy<\/a>, often at the expense of smaller businesses. Kim, by contrast, was a classic rags-to-riches story, growing up in poverty to become the first in his family to go to college. At his peak, Kim even overtook Samsung heir Lee Jae-yong as the richest man in South Korea with a fortune estimated at over $13 billion<\/a>.<\/p>\n<\/div>\n In all seriousness, the aggressive pursuit of a monopoly is what\u2019s really landed Kakao and Kim in hot waters. The company has faced increased government scrutiny after a Kakao data center fire in 2022 caused a five-day nationwide outage<\/a>, sparking concerns about Korea\u2019s dependence on a handful of tech companies. Since then, Kakao has also been the subject of tax evasion investigations<\/a>. According to Bloomberg<\/em><\/a>, Kakao has also lost a third of its value just this year, with Kim losing roughly $10 billion of his own fortune. <\/p>\n<\/div>\n