South Korean prosecutors have indicted Kim Beom-su, the billionaire founder of tech giant Kakao Corp, on charges of stock market manipulation. Kim, also known as Brian Kim, was arrested last month and has been in detention since, according to Yonhap News Agency.
The indictment centers around allegations that Kim and other Kakao executives purchased large shares in K-pop agency SM Entertainment. This move was reportedly intended to inflate SM Entertainment’s stock price to undermine a competing takeover bid.
Kim Beom-su, widely regarded as a visionary in South Korea’s digital industry, is known for founding Kakao Corp and building it into a tech powerhouse with assets valued at 86 trillion won ($62 billion). His journey from launching the popular messaging app KakaoTalk in 2010 to leading one of South Korea’s most successful internet businesses has earned him a prominent place in the country’s technology sector. However, this reputation has been overshadowed by recent legal troubles.
Prosecutors have accused Kim of manipulating the stock price of SM Entertainment in February last year to thwart a takeover attempt by Hybe, the company behind K-pop sensation BTS. The allegations claim that Kim was involved in a four-day buying spree of SM Entertainment shares to inflate its market value, making it difficult for Hybe to acquire the company. Despite these severe accusations, Kim has denied any wrongdoing, asserting through a company statement that he never ordered or tolerated illegal activities.
The legal case has shaken South Korea’s technology industry, marking the first time a high-profile tech executive like Kim has been indicted on such charges since Samsung Electronics chairman Lee Jae-yong’s bribery conviction in 2017. Kim’s indictment has raised concerns among shareholders, but Kakao’s CEO, Shina Chung, reassured investors during a post-earnings call that the company would continue to provide its services without disruption. Kakao recently reported a second-quarter operating profit of 134 billion won ($97.24 million), an 18.5% increase from the previous year.
Kim’s trial date has yet to be determined, but the outcome is anticipated to have significant repercussions for him and South Korea’s tech industry. As the situation unfolds, the future of Kakao and its leadership remains under scrutiny.
During the company’s latest earnings call, Kakao’s current CEO, Shina Chung, refrained from providing additional details on the legal proceedings involving Kim Beom-su. The situation has also implicated other former executives, including former Kakao CEO Hong Eun-taek and former Kakao Entertainment CEO Kim Sung-soo, who have both been indicted without detention, according to Yonhap.
Kakao, known for operating South Korea’s largest messaging app, KakaoTalk, has expanded its reach across various online sectors, including gaming, shopping, and banking. The company’s dominance in the country’s digital landscape became evident in 2022 when a server fire caused a significant outage, sparking concerns over South Korea’s heavy reliance on Kakao’s services.
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