Bithumb Pushes CEO Reappointment Despite $40 Billion Bitcoin Glitch and Record Fine

South Korea’s second-largest crypto exchange, Bithumb, will ask shareholders on March 31 to reappoint CEO Lee Jae-won for a new two-year term. This is despite a $44 billion phantom Bitcoin (BTC) glitch, a record $24 million fine, and three active regulatory investigations.

The decision to retain leadership rather than pursue a management reshuffle signals that Bithumb is prioritizing operational continuity over accountability at a moment when regulators are still determining whether further sanctions are warranted.

What the $44 Billion Glitch Exposed

On February 6, a Bithumb staffer running a promotional event entered payout units in BTC rather than Korean won. The system credited 695 user accounts with a combined 620,000 BTC, roughly 15 times the exchange’s actual holdings of approximately 42,000 BTC.

The trading engine treated the phantom balances as real. Within 35 minutes, some users sold or withdrew approximately 1,788 BTC worth $125-135 million, crashing Bithumb’s local Bitcoin price by 17%. Global markets were unaffected.

Bithumb recovered 99.7% of the erroneous credits the same day. The exchange covered the remaining shortfall from company funds and reimbursed affected users at 110% of losses. No customers lost money permanently, and on-chain reserves remained intact.

However, CEO Lee admitted during a February 11 parliamentary hearing that the exchange only reconciled internal ledgers with actual holdings once every 24 hours and that smaller errors had occurred previously.

Three Probes Still Hanging Over Bithumb

The Financial Intelligence Unit (FIU) has already imposed South Korea’s largest-ever penalty on a virtual asset exchange.

The 36.8 billion won ($24 million) fine stemmed from 6.59 million anti-money laundering violations uncovered during a 2025 inspection, according to Yonhap. Bithumb also received:

• A six-month partial business suspension,
• A CEO reprimand, and
• A six-month suspension for its compliance officer.

Two additional investigations remain open. The Financial Supervisory Service (FSS) is examining potential violations of the Virtual Asset User Protection Act related to the Feb. 6 glitch.

A separate FIU probe is reviewing Bithumb’s order book sharing with Stellar Exchange, an unregistered Australian platform.

South Korean crypto exchanges are not legally classified as financial institutions. This means a CEO reprimand does not legally bar an executive from continuing in the role.

Still, the precedent set by rival Upbit suggests otherwise. After Upbit’s parent company Dunamu received similar FIU sanctions in February 2025, then-CEO Lee Sirgoo stepped down within three months and moved into an advisory role, according to the Korea Times.

What the March 31 Vote Decides

Beyond the CEO reappointment, the shareholder meeting will vote on:

• Raising Bithumb’s bond issuance limit to 300 billion won ($225 million),
• Appointing a new auditor to strengthen internal controls, and
• Renaming affiliate Bithumb A to “Bithumb Asset.”

The bond limit increase is widely seen as preparation for a future IPO and potential market consolidation.

Whether Lee survives the vote or not, the probes will continue. However, the March 31 outcome will reveal whether Bithumb’s shareholders view continuity as a strength or a liability, given that trust in the exchange’s internal systems has not yet been restored.