A bear attack on Kakao? (Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)

South Korea internet giant Kakao has seen its stock price slump to its lowest point in almost a year, as corruption rumours surround the company CEO and the CEO of its fintech subsidiary KakaoBank. All of Kakao’s subsidiaries on the KOSPI market felt the pain during a particularly brutal day of trading.

Stock in Kakao Corp. fell on Wednesday as much as 5.1% to 90,000 won, its lowest point since March 2021. This takes the company’s fall this year to more than 20%, with a total of $25bn wiped off its market value since December.

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The Kakao crisis came about with the news that South Korean police have launched an investigation into Kakao founder and chairman Brian Kim. Allegations raised by civic group Speculative Capital Monitoring Center claim Kim evaded taxes worth 886bn won ($743mn) during the 2014 merger of Kakao and web giant Daum.

Kakao has dismissed the allegations as “groundless”, according to Bloomberg.

Wednesday also saw the revelation that KakaoBank CEO Yoon Ho-young shed a considerable amount of his stock in the neobank challenger for a quick profit in the fourth quarter of 2021.

The CEO exercised the stock option to sell “tens of thousands” of the 260,000 shares he holds in KakaoBank, according to The Korea Times. Yoon joins eight executives from KakaoPay, Kakao’s mobile payment business arm, who sold a combined 440,933 shares of the company on December 10. The execs collected a combined profit of approximately 90bn won ($75mn).

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Shares in KakaoBank Corp. fell by 3.46% to a close of 41,800 won, its lowest level since debuting on the KOSPI market in August 2021. The banking challenger, which had insisted back in July that its IPO was not “overvalued”, suffered alongside all of Kakao’s various subsidiaries in light of the Kim investigation news.

KakaoPay also reached its lowest ever trading level on Wednesday, dropping by 4.48% to a closing price of 128,000 won. In an unprecedented event, the same day saw 10% of its KakaoPay Securities staff resign on the spot simultaneously.

KakaoGames meanwhile lost 3.6% of its trading price.

These events suggest a cloudy 2022 for Kakao, which, along with e-commerce giant Coupang, is one of the top disruptors in a landscape of longstanding chaebol conglomerates in South Korea.

Founded in 1995, Kakao Corp. is South Korea’s ninth biggest-listed company, with a market cap of $35.3bn according to GlobalData figures. Its total revenue in 2020 was $3.526mn, an increase of 35.40% from the previous financial year.