Billionaire Founder of Kakao Corp Arrested on Stock Manipulation Charges

Kim Beom-su, the billionaire founder of Kakao Corp, has been arrested by South Korean authorities for allegedly manipulating stocks during the acquisition of a K-Pop agency. Industry experts warn that his arrest could jeopardize Kakao's investments in AI and overseas expansion plans. Shares of Kakao Corp and its affiliates have plummeted following the news.

South Korean authorities have apprehended Kim Beom-su, the billionaire visionary behind tech giant Kakao Corp, on charges of stock manipulation related to the acquisition of a K-Pop agency last year. This marks the latest legal hurdle for Kakao, which manages South Korea's leading chat app, following previous courtroom challenges.

Kim, also recognized as Brian Kim, is credited with building Kakao Corp, valued at 86 trillion won ($62 billion) by assets, from its inception in 2010. Any legal actions against him could jeopardize Kakao's significant investments in artificial intelligence and its ambitions for international growth, according to industry analysts.

Prosecutors allege that Kim interfered with the stock price of SM Entertainment in February last year to block a competitor, Hybe, from acquiring the company. Kakao Corp termed the situation 'unfortunate,' stating that CEO Shina Chung would work to mitigate any leadership gaps. Kim has denied all allegations, stating he neither authorized nor allowed any illegal activities.

The Seoul Southern District Court authorized Kim's arrest to prevent the destruction of evidence and because he was considered a flight risk. Kim is currently detained at the Seoul Nambu Detention Centre, and prosecutors have up to 20 days to decide on an indictment. A conviction could have severe implications for Kakao's control of KakaoBank Corp, given financial regulations that limit bank ownership by those convicted of financial crimes.

Kakao shares, which have already declined by 24% this year, dropped another 5.4% following the arrest news. Affiliates Kakaopay and Kakao Games also hit record lows, with declines of 7.8% and 5.2%, respectively, while Kakaobank fell 3.8%.

(With inputs from agencies.)