South Korean officials have detained Brian Kim, the founder of Kakao Corp., on accusations of market manipulation, leading to one of the most prominent business figures in South Korea in recent years to face imprisonment.
The Seoul Southern District Court has ordered Kim into custody, citing concerns of potential evidence tampering and escape. The decision represents a significant development for the conglomerate, which swiftly ascended to the forefront of South Korea’s technology sector before facing increased regulatory scrutiny.
Following the court’s decision, Kakao’s stocks experienced a decline of up to 5.4% in Seoul, while its fintech affiliate, KakaoBank Corp., saw a 2% increase in morning trading. Kim’s potential guilt may lead to Kakao relinquishing its stake in the online fintech affiliate to accommodate other investors, contingent upon legal proceedings.
Kim’s predicament marks a departure from the traditional landscape of corporate convictions in Korea. The entrepreneur is accused of involvement in a stock-rigging scheme during the high-profile takeover of K-pop agency SM Entertainment Co. in 2023, a claim vehemently denied by Kakao representatives.
Despite Kim’s humble beginnings and meteoric rise to success, highlighted by Kakao’s diverse online services ranging from banking to entertainment, his recent legal challenges have tarnished his reputation. The ongoing saga has also ensnared key executives within Kakao, signaling a turbulent period for the tech giant.
Amidst this turmoil, Kim’s fortune has dwindled, and the conglomerate’s market value has plummeted. The company’s recent appointment of a new CEO underscores its efforts to navigate through the crisis and rebuild its reputation in the industry.
