Kakao Founder Cleared of Stock Manipulation, Shares Surge 5%

• Court ruling clears Kim Beom-su, boosting Kakao’s stock and easing legal uncertainties.
• Case likely advances to Supreme Court, but Kakao’s regulatory risks appear reduced.
• Verdict safeguards KakaoBank’s ownership structure amid strict South Korean financial crime laws.

The founder of South Korea-based Kakao Corp, Kim Beom-su, has won a significant battle with a South Korean court in clearing him of stock manipulation allegations, which is a big step in favor of the billionaire and the tech firm that founded the most popular messaging app in South Korea. The decision caused the share price of Kakao to soar, and the stocks increased by over 5 percent on Tuesday. In August, prosecutors requested a 15-year jail sentence and a 500 million won fine (350,000 US dollars) to which the court had rejected all the charges. Analysts claimed that the decision minimized the legal issues facing Kakao at a time when the case is going to the Supreme Court.

Kim’s case proceeds to the Supreme Court

Authorities arrested Kim in July 2021, alleging that he fraudulently boosted SM Entertainment’s share value in 2023 to block a takeover by rival Hybe. He was later released on bail in October 2024. Expressing gratitude to the court, Kim said he hoped the ruling would help Kakao move beyond the lingering allegations of market manipulation.

Since 2010, the creation of KakaoTalk, Kim has been very critical in developing the digital ecosystem of South Korea. As time progressed, he diversified Kakao by launching game products and services, e-commerce, finance and mobility services. Today, Kakao has a network of affiliates worth approximately 94 trillion won in value ($66.13 billion), and its main application is used by almost 50 million Korean users.

Kyobo Securities analyst Kyong Dong-woo said the case is likely to advance to the Supreme Court but noted that the decision eased legal pressure on the company. He added that the ruling reduces Kakao’s legal risks since the court found Kim not guilty of all charges.

Broader implications for Kakao and South Korea’s markets

The decision of the court has far-reaching consequences to the financial stability of Kakao. Convicting Kim would have endangered the control of Kakao Bank over its online banking subsidiary company, KakaoBank. The South Korean laws do not allow those with a conviction in financial offences to own more than 10% interest in a bank. Kim is the mother company which has a 24% direct and indirect holding in Kakao. Kakao failed to react immediately to comments in relation to the ruling.

South Korean financial regulators on the other hand keep attacking market manipulation. In September, the authorities reported that affluent people and financial analysts had conspired in massive stock-rigging scams valued at approximately 100 billion won (72 million). The current investigation reveals how Seoul continues to strengthen its control over its financial markets following a series of high-profile scandals.