Kakao faces major crisis amid the arrest of its founder

Kakao, which has been scrutinized by both the political world and the public for poor management and unchecked expansion, is now facing significant legal challenges and the biggest crisis since its founding in 2006. The company is at risk of losing Kakao Bank, which has been achieving record growth every quarter.

Kakao, which holds a 27.16% stake in Kakao Bank, could be forced to sell its shares if it receives a punishment more severe than a criminal penalty. This would make it ineligible to remain the largest shareholder, requiring it to reduce its stake to a maximum of 10%. However, if the Financial Services Commission deems the violation minor, Kakao may be allowed to keep its shares above the limit.

An IT industry insider commented that Kakao is in a crisis, with declining profitability and falling stock prices eroding confidence among employees and shareholders. "Kakao needs to restore profitability in its core business areas and recover its stock prices, but the arrest of its founder has further dimmed the prospects of a recovery," he said.