Kakao founder denies stock manipulation accusations

[Courtesy of Kakao Corp.]

Kim Beom-su, founder of South Korea’s platform giant Kakao Corp. and co-chairman of the CA Council, denied allegations related to market manipulation during the company’s acquisition of SM Entertainment Co. on Thursday. He also dismissed the legal risks, and emphasized that Kakao’s strategy should continue undeterred.

“I cannot provide detailed explanations because it is an ongoing matter but the current allegations are unfounded,” Kim said during an interim meeting to discuss Kakao Group issues among key representatives including Kakao chief executive officer Chung Shin-a.

“I have never called for nor condoned any illegal actions, and I believe the truth will ultimately come to light.”

Kim emphasized that Kakao Group should continue its core tasks of management innovation and AI-based innovation without disruption, urging that the group should strive harder “to fulfill our duty as Korea’s leading tech company, particularly in times of difficulty or reform that meets national standards.”

Kim faces allegations of manipulating SM Entertainment’s stock price higher than Hybe Co.’s public takeover price of 120,000 won ($86.7) during Kakao’s acquisition process in February 2023 to obstruct Hybe’s open offer.

Prosecutors summoned Kim during the previous week for overnight questioning lasting more than 20 hours, and on Wednesday requested a warrant for his arrest on charges of violating the Capital Markets Act.

The substantive warrant review to determine whether to arrest Kim or not is scheduled to be held on July 22nd, 2024, at the Seoul Southern District Court.

Kakao’s messenger service Kakao Talk, in the meantime, experienced a malfunction on Thursday where some users were unable to log in. According to Kakao, some Kakao Talk PC version and Daum users had trouble logging in from 10:54 a.m. that day but were able to do so around 12:20 p.m.