Prosecutors Seek 15-Year Term for Kakao Founder

Kim Beom-su arrived at the Seoul High Court on Wednesday, September 23, 2026. Inside, prosecutors asked the court to impose a fifteen-year prison term on the Kakao founder.

The request closed the appeal over alleged manipulation of SM Entertainment shares. “The lower court’s ruling contains errors in its findings of fact and in its application of the law, and the acquittals of the defendants should be overturned,” they told the bench. That single demand set the scale of what the state still wanted from the man who built Kakao.

February 2023 produced the volume prosecutors later called the scheme. Across 553 transactions that month, they said, buyers spent about 240 billion won on SM Entertainment shares—roughly 177 million dollars. HYBE’s tender offer stood at 120,000 won a share, and the state argued the purchases were meant to keep SM’s stock above that line so the rival bid could not succeed. Kim was also charged with failing to disclose an 8.16 percent holding in the agency, a stake prosecutors said had been concealed through One Asia Partners, a private equity firm. At the first trial they fixed his role at the top of the structure. “As the de facto head of the Kakao Group, he was the ultimate beneficiary of the scheme,” they said.

Once the month’s buying was done, the tender fight still had to resolve on the ground. In March 2023, HYBE’s bid fell through. Kakao and Kakao Entertainment secured a 39.9 percent stake in SM Entertainment, the agency behind aespa, EXO, and NCT.

Kim had founded Kakao Inc. in 2006 after leaving the chief executive post at NHN, the organization that emerged from the Hangame and Naver.com merger. KakaoTalk, the free messaging service he launched in March 2010, reached around 90 percent of domestic users by 2015 and became the channel through which the group’s other businesses—games, commerce, mobility, and later entertainment—reached their customers. SM Entertainment had spent decades refining an in-house idol system: trainees selected young, drilled in singing and dance under one roof, managed across every part of their careers, and debuted as acts built for Korean charts and overseas stages.

Prosecutors later told the appeals bench that the first court had looked past what the sequence made plain. “The lower court ignored clear evidence that aligns with the criminal facts,” they said.

On October 21, 2025, the Seoul Southern District Court cleared Kim Beom-su, Kakao Corp., and the co-defendants. The panel’s finding was blunt. “Based on evidence from the prosecution, it is difficult to recognize that there were discussions to collude in stock manipulation,” the court said. Judges questioned whether blocking the tender had ever been necessary. They also set aside the testimony of Lee Jun-ho, the former investment-strategy head at Kakao Entertainment, calling it inconsistent and of low credibility. Large on-market purchases that moved the share price were not, by themselves, enough to prove manipulation.

Kim had already given the court his account of the February buys. “The purchases were not made to block HYBE’s tender offer. Rather, we anticipated a price surge in SM shares if HYBE’s bid failed,” he said. The judges treated that explanation as reasonable. Seven days later, on October 28, 2025, prosecutors filed their appeal.

The appeal opened at the Seoul High Court on June 24, 2026, with Kim in attendance. The bench later declined a prosecution request to call HYBE chairman Bang Si-hyuk as a witness. Bang had been accepted at the first trial but never appeared.

On September 23 prosecutors set out the terms for everyone else. They asked a twelve-year prison term and a 510 million won fine for Bae Jae-hyun. They sought nine years for Kim Sung-soo, the former chief executive of Kakao Entertainment, and seven years each for Hong Eun-taek and Kang Ho-jung. Under the dual-punishment rule, which extends criminal liability to a company for offenses committed by its executives, they asked for 500 million won fines against Kakao Corp. and Kakao Entertainment.

Kim closed by denying that he had ordered illegal or improper methods. He pressed the absence of any timing, any place, or any detail of collusion with One Asia Partners in the prosecution’s account. “I have always believed that business growth must proceed in accordance with the law and principles, and in this case as well, I never gave any illegal orders,” he told the court.

Prosecutors sought confiscation of approximately 127.2 billion won from Kim Beom-su, per Aju Press. They set his fine at 510 million won—about 377,000 dollars, according to Yonhap and Reuters—while some outlets reported the ask as 500 million won. “Despite multiple clear pieces of evidence consistent with the criminal facts, the lower court failed to consider them. The lower court's ruling contains errors in fact-finding and legal interpretation, so its acquittal of the defendants must be overturned,” they told the bench.

A conviction would force Kakao’s stake in KakaoBank under a hard ownership limit. The company holds around 27 percent of the lender. Under South Korean law, an entity convicted of a financial crime cannot own more than 10 percent of a bank.

The Seoul High Court is due to deliver its ruling on November 20.