Today’s News
The founder of Kakao Corp, Kim Beom-su, also known as Brian Kim, has been arrested on charges of stock manipulation linked to the acquisition of a K-Pop agency last year.
This arrest adds to the legal challenges facing South Korea’s leading chat app provider, following last year’s trial involving the company and another executive for alleged misconduct during the same deal.
Image Source: The Korea Herald, TechinAsia
Kim, recognized as a pioneer in South Korea’s digital sector, has grown Kakao’s network of affiliates—valued at 86 trillion won (USD 62 billion)—since he launched the chat app in 2010. The current legal issues could put Kakao’s future investments in artificial intelligence and plans for international expansion at risk.
Prosecutors allege that in February of the previous year, Kim manipulated the stock price of SM Entertainment to obstruct its acquisition by rival Hybe. Despite these allegations, Kim maintains his innocence, asserting, “I never ordered or tolerated any illegal activity,” according to a company statement. He has not yet been formally charged.
Image Source: KED Global
Image Source: The Korea Times
Legal and Regulatory Consequences for Kakao
The Seoul Southern District Court issued an arrest warrant for Kim, citing the risk of evidence tampering and potential flight, a court official reported on Tuesday. Kim is now detained at the Seoul Nambu Detention Centre, where he will remain for up to 20 days as prosecutors decide whether to proceed with an indictment.
The ramifications of these charges could extend to Kakao’s ownership of the online banking arm, KakaoBank Corp, as financial regulations may limit those convicted of financial crimes from holding more than a 10% stake in a bank.
Furthermore, Kakao could face increased regulatory scrutiny, which would complicate major corporate decisions regarding AI investments and international growth. Amid these developments, Kakao Corp’s shares have suffered, dropping 3.4% in morning trading to their lowest since November, marking a 24% decline year-to-date.
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