Korea Moves to Arrest Kakao Founder Over Price-Rigging Allegations

Surprising Turn in South Korean Probe: Kakao Founder Faces Arrest Warrant

South Korean prosecutors have taken an unexpected step in their investigation into alleged stock market manipulation by seeking an arrest warrant for billionaire Brian Kim, the founder of Kakao Corp. This move is part of an ongoing probe into activities surrounding a high-stakes bidding war over SM Entertainment Co. in 2023.

The Seoul Southern District prosecutors’ office announced it is aiming to detain the high-profile entrepreneur, following detailed inquiries into accusations of price-rigging linked to the acquisition battle. A spokesperson for the office confirmed that a request for an arrest warrant has been submitted concerning violations of capital markets law. However, further details remain under wraps. The final decision on the arrest warrant will follow a forthcoming court hearing.

Kakao’s representative has vehemently rejected the accusations, asserting that no illegal actions occurred during the SM Entertainment acquisition process. They indicated that more comprehensive explanations will be provided during the court proceedings.

In the wake of this announcement, Kakao’s stock price fell by as much as 0.9%, reaching 40,550 won ($29). This market reaction underscores the potential impact of the allegations on investor confidence. The company, which stands as a leader in South Korea’s internet industry, won a controlling interest in SM Entertainment after a fierce bidding competition with Hybe Co., the powerhouse behind the globally renowned boyband BTS.

Financial regulators have implicated Kakao executives, alleging they purchased 240 billion won worth of SM shares to interfere with Hybe’s acquisition attempt. The latest legal development signifies a critical juncture in the probe, with industry watchers closely monitoring the court's decision.