Bithumb Board Pushes for CEO Lee Jae-won’s Reappointment Despite $43 Billion Error and Regulatory Scrutiny
- Why Is Bithumb’s Board Backing CEO Lee Jae-won?
- The $43 Billion Bitcoin Blunder: What Went Wrong?
- Regulatory Heat: Fines and License Risks
- How Does Bithumb’s Strategy Compare to Upbit’s?
- What’s Next for Bithumb?
- FAQs
In a bold move, Bithumb’s board is advocating for CEO Lee Jae-won’s reappointment for another two-year term, despite a costly $43 billion error, a looming six-month suspension, and record fines. The decision hinges on a legal loophole that exempts crypto exchanges from being classified as financial institutions in South Korea. Meanwhile, competitors like Upbit have taken stricter measures, with former CEO Lee Sirgoo stepping down after similar violations. As Bithumb navigates regulatory turbulence, its leadership’s fate will be decided at a shareholder meeting on March 31, 2026.
Why Is Bithumb’s Board Backing CEO Lee Jae-won?
Bithumb, South Korea’s second-largest crypto exchange, is standing by its CEO Lee Jae-won despite a series of setbacks. The board argues that his leadership is critical to navigating the company’s current challenges, including a $43 billion bitcoin distribution error and a $36.8 billion fine for anti-money laundering (AML) violations. Unlike traditional financial institutions, crypto exchanges like Bithumb aren’t legally required to replace executives after such incidents, giving the board leeway to retain Lee.
In contrast, Upbit’s former CEO Lee Sirgoo resigned in early 2025 following AML breaches, opting to protect the company’s reputation. Bithumb’s board, however, is leveraging the regulatory gray area to keep Lee in charge, citing his experience in managing crises.
The $43 Billion Bitcoin Blunder: What Went Wrong?
Last month, a clerical error during a promotional campaign led to Bithumb accidentally distributing 620,000 BTC (worth $43 billion) instead of 2,000 KRW ($1.38) per user. While most of the funds were recovered, the incident exposed glaring operational vulnerabilities. The Financial Supervisory Service (FSS) is investigating why these flaws weren’t detected during six prior audits between 2022 and 2025.
Critics, including lawmaker Kang Min-guk, have slammed the FSS for its lax oversight. The incident has also raised questions about Bithumb’s internal controls, especially as it faces a six-month suspension that will block new users from withdrawing assets.
Regulatory Heat: Fines and License Risks
Bithumb’s troubles don’t end with the Bitcoin error. The exchange was hit with a 36.8 billion KRW fine for AML and know-your-customer (KYC) failures—the largest ever imposed on a virtual asset service provider (VASP) in South Korea. Additionally, its partnership with stellar Exchange, an unlicensed operator, could jeopardize its VASP license renewal.
The board is pushing to double its convertible bond limit to 300 billion KRW ($225 million) to shore up finances. It has also nominated Jung Yeon-dae, a Sogang University professor and tax expert, as auditor to address FSS concerns about “complacent supervision.”
How Does Bithumb’s Strategy Compare to Upbit’s?
While Bithumb is doubling down on its CEO, Upbit took a different approach. After receiving a 35.2 billion KRW fine in early 2025, Upbit’s CEO Lee Sirgoo resigned and transitioned to an advisory role. The MOVE was seen as a bid to restore trust and secure license renewal.
Bithumb’s insistence on retaining Lee Jae-won suggests confidence in his ability to steer the company through regulatory storms. However, with shareholder approval pending and ongoing investigations, the final decision remains uncertain.
What’s Next for Bithumb?
The upcoming shareholder meeting on March 31, 2026, will determine whether Lee gets another term. If reappointed, he’ll face the daunting task of rebuilding trust, complying with stricter regulations, and stabilizing operations post-suspension. The outcome could set a precedent for how crypto exchanges handle executive accountability in South Korea.
FAQs
Why is Bithumb’s CEO being reappointed despite the $43 billion error?
Bithumb’s board argues that CEO Lee Jae-won’s experience is vital for navigating ongoing regulatory and operational challenges. Crypto exchanges aren’t legally classified as financial institutions in South Korea, giving the board flexibility to retain him.
What caused the $43 billion Bitcoin distribution error?
A clerical mistake during a promotion led to users receiving 620,000 BTC instead of 2,000 KRW. Most funds were recovered, but the incident revealed systemic flaws in Bithumb’s controls.
How does Bithumb’s response compare to Upbit’s?
Upbit’s former CEO resigned after similar violations, while Bithumb’s board is backing its CEO, citing his crisis-management skills.
What are the risks to Bithumb’s VASP license?
Its partnership with unlicensed Stellar Exchange and ongoing FSS investigations could threaten license renewal.
When will the final decision on Lee’s reappointment be made?
Shareholders will vote on March 31, 2026.
