A Seoul court has issued an arrest warrant for Brian Kim, the founder of South Korea’s Kakao, on allegations of stock price manipulation related to the company’s 2023 acquisition of K-pop agency SM Entertainment. The Seoul Southern District Court granted the warrant on Tuesday following a hearing on Monday, citing concerns about evidence tampering and the risk of flight.
Kim could face up to 20 days in jail while prosecutors continue their investigation before formal charges are filed. This development may impact Kakao’s operations and its AI-related initiatives, as Kim has played a pivotal role in the company’s strategic decisions.
Kim is accused of manipulating SM Entertainment’s share price during a bidding war in 2023. Kakao competed with Hybe, the owner of BigHit and K-pop boyband BTS, for SM Entertainment. Reports suggest that Kakao bought KRW 240 billion (~$174 million) worth of SM Entertainment shares across 553 transactions in February 2023. This reportedly inflated the share price beyond Hybe’s offer price of KRW 120,000 per share, leading Hybe to withdraw its bid.
Kakao has denied the allegations, stating that Kim never authorized or condoned any illegal activities. Kakao’s chief investment officer, Jae-Hyun Bae, was arrested last October on similar charges and is currently on trial.
Founded in 2006, Kakao introduced South Korea’s leading messaging app, KakaoTalk, in 2010. The company has since evolved into a major player, offering services such as Kakao Mobility for on-demand taxis, Kakao Bank for online banking, and Melon for music streaming. Between 2011 and 2022, Kakao made 13 acquisitions, with an average deal size of $546 million.
