Founder of South Korea’s Kakao arrested for suspected stock manipulation

Seoul, South Korea —The billionaire founder of South Korean tech giant Kakao Corp, Kim Beom-su was arrested on Tuesday on accusations of manipulating stocks during the acquisition of a K-Pop agency last year.

The case is the latest legal twist for Kakao, which runs South Korea’s largest chat app, after the company and another executive went on trial last year for alleged wrongdoing during the same acquisition.

Kim, who is also known as Brian Kim, is seen as a visionary in South Korea’s digital industry for building Kakao’s group of affiliates – worth 86 trillion won ($62 billion) by assets – from the ground up since launching the chat app in 2010.

Any case against him could jeopardize Kakao’s investments into artificial intelligence as well as its overseas expansion plans, industry experts said.

Prosecutors say Kim was involved in manipulating the stock price of SM Entertainment in February last year to hinder a competitor, Hybe, from acquiring it.

KakaoTalk logo on the App Store

Kim has denied the accusations, saying he never ordered or tolerated any illegal activity, the company said in a statement. He has so far not been formally charged. Kakao and Kim’s lawyer did not immediately provide further comment on Tuesday.

The high-profile tech entrepreneur is the largest shareholder of Kakao Corp, with a 24% stake that he and affiliated entities control.

Seoul Southern District Court approved the arrest warrant to prevent the potential destruction of evidence, and because Kim was a flight risk, a court official said on Tuesday.

SEOUL, SOUTH KOREA — FEBRUARY 18: Winter, Karina, Giselle and Ningning of girl group aespa perform onstage during the Circle Chart Music Awards at the KSPO Dome on February 18, 2023 in Seoul,