Kakao Corporation founder Kim Beom-su has been acquitted of stock manipulation. 

The Seoul Southern District Court determined that Kim had not violated the Capital Markets Act during the company's acquisition of SM Entertainment in 2023. Former Kakao Chief Investment Officer Bae Jae-hyun, the company itself and subsidiary Kakao Entertainment were also acquitted. 

Prosecutors had argued that Kim and other Kakao executives had inflated the share prices of K-pop powerhouse SM Entertainment to obstruct a takeover by HYBE, the parent company of BTS agency BigHit Music.

Hybe eventually suspended the bid, allowing Kakao and its subsidiary to jointly secure a controlling stake of nearly 40 percent in SM.

The court said the prosecution's evidence made it difficult to conclude that a scheme to manipulate SM shares had taken place.

It said Kakao's buy order, in consideration of the time gap and method of purchase, differed significantly from a stock price manipulation order, making it difficult to prove an intent to inflate SM Entertainment's price to above its market value.

Prosecutors, who earlier sought a 15-year sentence for Kim, are set to review a possible appeal.