Kakao Founder Faces 15-Year Prison Term in K-Pop Takeover Scandal

On August 29, 2025, South Korean prosecutors asked the court to sentence Kakao founder Kim Beom-su to 15 years in prison.

They also requested a 500 million won fine. The case centers on alleged stock manipulation during Kakao’s battle to take control of SM Entertainment in 2023. The final verdict is set for October 21, 2025.

The story has shocked both the tech and music industries. It’s not just about numbers on a balance sheet. It’s about power, influence, and the messy fight over K-pop’s future.

Kakao’s Rise from Messaging App to Powerhouse

Kim Beom-su, often called Brian Kim, is the billionaire behind Kakao Corp. He built it from a simple messaging app into one of South Korea’s most powerful tech groups. KakaoTalk became a daily tool for millions.

From there, Kakao grew into banking, gaming, transport, and entertainment. Today, the company is valued at more than 86 trillion won in assets.

On the other side is SM Entertainment. SM is one of Korea’s biggest K-pop agencies. Its artists include Girls’ Generation, EXO, Red Velvet, NCT, and aespa. The company’s global reach is massive. For years, it has been a cornerstone of the Hallyu wave.

And then there was HYBE. The company behind BTS stepped into the picture. That move set off one of the fiercest corporate battles in Korean entertainment history.

In February 2023, the drama began. HYBE bought a 14.8% stake in SM from founder Lee Soo-man. The price was 120,000 won per share. HYBE then launched a tender offer, hoping to grab 25% of the company.

At the same time, Kakao struck a deal for new shares and bonds worth 217 billion won. That gave Kakao a 9.05% slice and made them a key shareholder.

The fight escalated quickly. By March 2023, HYBE backed out, citing inflated costs. Kakao came out on top.

They secured a 39.87% controlling stake in SM Entertainment. Many saw this as a big victory. But prosecutors later argued that the win was not clean.

The Allegations and Evidence

Prosecutors say Kim Beom-su used illegal tactics to tilt the market. The accusation is clear: stock manipulation.

The charges focus on two main strategies. First, direct buying. Kakao and Kakao Entertainment are said to have purchased 240 billion won worth of SM shares across more than 500 trades. Second, outside help.

Through One Asia Partners, an additional 110 billion won worth of shares were purchased in hundreds of transactions.

Together, these actions allegedly boosted SM’s stock price. That made HYBE’s tender offer price of 120,000 won per share look too low. By raising the price artificially, Kakao secured the upper hand.

Evidence has been mounting. Prosecutors presented minutes from Kakao’s investment committee meetings in February 2023. They say the manipulation plan was openly approved.

They also showed internal Kakao messages that referenced Kim’s directions through a private equity fund. Witness testimony added weight, including claims from Kakao executives that outside firms were asked to help push up the stock.

Kim was arrested in July 2024. He spent more than 100 days in custody before being released on bail due to health concerns.

He has bladder cancer and stepped down from key Kakao leadership roles in 2025. Still, he remains the company’s largest shareholder.

Co-Defendants and Sentencing

The case doesn’t stop with Kim. Six others face charges. Former Kakao CIO Bae Jae-hyun could get 12 years. Private equity boss Ji Chang-bae may face 10 years.

Former Kakao Entertainment CEO Kim Sung-soo is looking at 9 years. Other Kakao leaders are facing between 7 and 10 years each. Both Kakao Corp. and Kakao Entertainment also face 500 million won fines.

Under South Korea’s Capital Markets Act, the punishment for market manipulation is severe. If the unfair gain is over 30 billion won, the minimum is 7 years.

If the manipulation is large and harmful, it can stretch to 15 years. Prosecutors have clearly asked for the maximum here.

Kim, for his part, denies everything. His lawyers say he was acting as a normal manager. They argue he had no role in outside buying. He insists he never planned to break the law. But the prosecution paints a very different picture.

Industry and Public Impact

The outcome could reshape both tech and entertainment in Korea. Kakao is already under pressure from slowing growth. The scandal has raised questions about its future in AI, finance, and overseas markets. CEO Chung Shin-a is trying to steady the company, but the case hangs over every move.

For K-pop, the case highlights how messy the business side can get. Fans usually see polished stages and global tours. Behind the scenes, it’s corporate warfare.

The public debate is sharp. Some say prosecutors are making an example of Kim. Others argue such punishment is necessary to protect fairness in the capital market. Investors are also worried. A guilty verdict could shake confidence in Korea’s tech giants.

Now everything waits on the October 21, 2025 verdict. If the court follows the prosecution’s request, Kim will face the harshest sentence possible. The decision may set a new precedent for future mergers, acquisitions, and financial battles in South Korea’s entertainment industry.

The story of Kakao, HYBE, and SM was already dramatic. With prison terms now on the table, it has turned into one of the most watched corporate trials in years.

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