**Allegations of Stock Price Manipulation Surrounding Kakao Founder**
A Seoul court has issued an arrest warrant for Brian Kim, the founder of South Korean internet giant Kakao, on allegations of stock price manipulation. The charges are related to Kakao’s takeover of K-pop agency SM Entertainment in 2023. The Seoul Southern District Court made the decision after a hearing on Monday, citing concerns of evidence destruction and flight.
If found guilty, Kim could face up to 20 days in jail as prosecutors continue their investigation before bringing formal charges. This development has the potential to disrupt Kakao’s operations and plans surrounding artificial intelligence (AI), as Kim has played a pivotal role in the company’s strategic decisions.
Kakao has assured the public that it will make every effort to minimize any management gaps resulting from this situation. The company’s spokesperson told TechCrunch that they are committed to maintaining stability during this challenging period.
**Accusations of Manipulating SM Entertainment’s Share Price**
The allegations against Kim stem from his alleged involvement in manipulating the share price of SM Entertainment during a bidding war in 2023. Kakao was competing with Hybe, the owner of South Korean music agency BigHit, which is responsible for managing K-pop sensation BTS.
According to reports, Kakao is accused of purchasing KRW 240 billion (~$174 million) worth of SM Entertainment shares through 553 trades in February 2023. This alleged action drove the share price of SM Entertainment above Hybe’s tender offer price of 120,000 KRW per share, ultimately causing Hybe to withdraw its offer.
In response to these allegations, Kakao released a statement last week denying any wrongdoing. They maintain that Kim never ordered or tolerated any illegal activities.
**Kakao’s Chief Investment Officer Already Facing Legal Consequences**
Interestingly, Kakao’s chief investment officer, Jae-Hyun Bae, was arrested in October of last year on similar charges of stock price manipulation. Bae is currently undergoing trial for his alleged involvement in the misconduct.
**Kakao’s Rise to Prominence and Expansion**
Founded in 2006, Kakao quickly rose to prominence with the launch of its messaging app, KakaoTalk, in 2010. The app became a sensation in South Korea and propelled Kakao into becoming the country’s Super App. Over the years, Kakao has expanded its services to include a wide range of offerings such as Kakao Mobility (on-demand taxi service), Kakao Bank (online banking platform), and Melon (music streaming service).
Kakao’s growth has been fueled by its acquisition strategy, with the company completing 13 acquisitions from 2011 to 2022. These acquisitions had an average value of $546 million, according to Tracxn.
**Conclusion**
The arrest warrant issued for Kakao’s founder, Brian Kim, on allegations of stock price manipulation has sent shockwaves through the company and the South Korean business landscape. As prosecutors continue their investigation, the outcome of this case will have significant implications for Kakao’s operations and strategic direction. Meanwhile, the accusations against Kim and the ongoing trial of Kakao’s chief investment officer highlight the need for transparency and ethical practices within the business world. As one of South Korea’s most influential companies, Kakao’s next steps will be closely watched by industry insiders and investors alike.