Kakao Founder Arrested for Alleged Stock Manipulation in K-Pop Agency Takeover

South Korean prosecutors have arrested Kim, the founder of Kakao Corp., on allegations of stock price manipulation during the company's takeover of K-pop agency SM Entertainment. The Seoul Southern District Court approved the arrest, and prosecutors have up to 20 days to decide on an indictment. Kim denies the accusations.

South Korean prosecutors announced on Tuesday the arrest of Kim, the founder of technology giant Kakao Corp., for alleged stock price manipulation during the company's acquisition of a major K-pop agency last year.

The Seoul Southern District Court approved an arrest warrant for Kim, citing concerns about potential flight risk or evidence destruction.

Prosecutors have up to 20 days to investigate the case and decide whether to indict Kim. A senior prosecutor, who requested anonymity, revealed that Kim is accused of collaborating with a private equity fund to manipulate the stock price of SM Entertainment, thwarting Hybe Corp.'s attempt to acquire the agency.

Kim, 58, has denied the allegations, according to the Seoul prosecutors' office and was not immediately available for comment.

Kakao Corp. is renowned for its popular mobile chat app, Kakao Talk, and has diversified into banking, online shopping, and other services. Due to these allegations, Kakao's stock price fell nearly 5% on Tuesday. SM Entertainment's executives had criticized Hybe's takeover attempt as hostile, warning of industry monopolization and higher costs for fans, and supported Kakao's offer as a “friendly” alternative.