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 related to the company’s acquisition of K-pop agency SM Entertainment in 2023.
The Seoul Southern District Court announced Tuesday that it had issued an arrest warrant for Kim after a hearing Monday due to “fears of destruction of evidence and absconding.”
He could be jailed for up to 20 days while prosecutors investigate further before filing charges. This could potentially disrupt Kakao’s operations and projects around artificial intelligence, as the founder has played a key role in the company’s strategic decisions.
A Kakao spokesperson told TechCrunch that the company will do everything it can to minimize the management gap with its co-chairs and board.
Kim is accused of being involved in manipulating SM Entertainment’s stock price during a bidding war for the company in 2023. Kakao was competing with Hybe, the owner of South Korean music label BigHit, which is behind K-pop boy band BTS.
Kakao is reportedly accused of purchasing KRW 240 billion (~$174 million) worth of SM Entertainment stock in 553 transactions in February 2023. This allegedly pushed the company’s stock price above Hybe’s tender offer price of KRW 120,000 per share, prompting Hybe to withdraw its offer.
Kakao said in a statement last week that the allegations were not true because Kim never ordered or condoned any illegal activity.
Kakao’s chief investment officer, Jae-Hyun Bae, was arrested last October over allegations of stock price manipulation following the buyout. He is currently on trial.
Founded in 2006, Kakao launched South Korea’s most popular messaging app, KakaoTalk, in 2010. It has become the country’s Super App and now offers a range of services, including on-demand taxi service Kakao Mobility, online banking platform Kakao Bank, and music streaming service Melon. From 2011 to 2022, Kakao made 13 acquisitions, with an average acquisition size of $546 million, according to Tracxn.
