Kim Beom Soo, founder of Kakao, was arrested around 1:00 AM on July 23, 2024, on charges of manipulating the stock price of SM Entertainment. The court issued the arrest warrant due to concerns over potential evidence destruction and flight risks.

On July 22, Kim attended a four-hour substantive examination of the warrant at the Seoul Southern District Court. During this examination, Judge Han Jeong-seok reviewed evidence and arguments to decide on the arrest. 

Kim arrived at the court and remained silent when asked by reporters about the charges and his involvement. He was subsequently transported to the Southern Detention Center in Guro-gu, Seoul, pending further legal proceedings.

The arrest followed a request from the Seoul Southern District Prosecutors’ Office on July 17, which accused Kim of artificially inflating SM Entertainment’s stock price to thwart a public offering by rival HYBE. This charge is linked to an earlier recommendation for indictment by the Financial Supervisory Service’s Special Judicial Police.

During the July 22 hearing, the prosecution presented extensive evidence, including hundreds of pages of documents and over 1,000 pages of written opinions, to support the arrest warrant. 

The prosecution alleged that Kim was involved in a transaction where 130 billion won worth of SM stocks were purchased through a Kakao Group affiliate on February 28 of the previous year. However, evidence of alleged collusion with One Asia Partners was notably absent from the warrant.

Kim has consistently denied the charges, claiming he was only briefed on the stock purchase agenda and not the details of the transaction. Despite his assertions, the court’s decision led to his arrest.

Kakao, South Korea’s largest platform company with a market capitalization of 22 trillion won, now faces significant challenges. The company’s ongoing reform efforts, spearheaded by Kim since October of last year, may be hindered by his arrest. 

These reforms included centralizing management and restructuring underperforming businesses. CEO Jeong Shin-ah has pledged to continue these reforms, but concerns remain about the potential impact of Kim’s departure on Kakao’s future growth and stability. 

Source: Chosun