Bithumb board members intend to reappoint current CEO Lee Jae Won, despite making a costly $43 billion mistake, facing a six-month suspension, and having to pay the largest fine ever for a Korean VASP.
Reappointment of executives would not even be on the table were it not for a loophole in the law that may never exist.
Under South Korean law, crypto exchanges are not legally classified as financial institutions, giving Bithumb’s board the opportunity to recommend the current CEO for reappointment rather than forcing him to resign.
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Bithumb, South Korea’s second-largest cryptocurrency exchange, will hold a high-stakes general meeting of shareholders on March 31, 2026 to decide whether Lee Jae-won will remain as CEO.
Just last month, 620,000 Bitcoins were accidentally distributed due to a “fat finger” error. Although the company was able to recover most of these funds, the incident exposed serious structural weaknesses.
Bithumb is also currently under a six-month partial suspension, but the company’s board has formally proposed the reappointment of current CEO Lee Jae-won.
Under Korean law, executives at traditional financial institutions are often forced to resign if they receive a reprimand warning from the Financial Intelligence Unit (FIU). However, cryptocurrency exchanges are currently classified as virtual asset service providers (VASPs) rather than formal financial institutions.
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Bitham is use This loophole needs to be eliminated in order to keep Lee in his current position. They argue that he is needed to help the exchange overcome recent regulatory challenges.
In one incident recently reported by Cryptopolitan, an employee accidentally entered the system. $BTC The system will credit the user with 2,000 as it will be used as a payment unit instead of KRW during the “Random Box” promotion. $BTC Instead of 2,000 won ($1.38), each ($132 million).
In total, $43 billion worth of Bitcoin was “created” on the exchange’s internal ledger. That amount was nearly 15 times the amount of reserves actually held by the exchange.
The Financial Supervisory Service (FSS) has almost completed its investigation into the “ghost coin” incident.
Congressman Kang Min-guk and other members criticized the Financial Supervisory Board For failing to detect these system flaws in six previous inspections conducted between 2022 and 2025.
Bithumb was also recently fined 36.8 billion won by the FIU for failing to comply with anti-money laundering (AML) and know-your-customer (KYC) standards. The impending six-month partial business shutdown will restrict new users from transferring assets from the platform.
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In early 2025, Dunamu’s former CEO Lee Sirgoo received a disciplinary warning for AML and KYC violations, but unlike Bithumb, Dunamu opted to change leadership.
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Lee Sirgoo resigned about three months after his reprimand and took on an advisory role to protect the company’s reputation and facilitate the license renewal process. The company was fined 35.2 billion won.
Bithumb’s board of directors is seeking shareholder approval to extend Lee Jae-won’s term to two years and to double the issuance limit for convertible bonds and bonds with stock acquisition rights to 300 billion won ($225 million).
The exchange is also proposing to appoint Jeong Yong-dae, a tax expert and part-time professor at Sogang University, as a new auditor in response to the Financial Supervisory Service’s criticism of “self-centered supervision.”
Bithumb remains under investigation regarding its order book sharing agreement with Stellar Exchange, an unregistered operator in South Korea. The exchange could jeopardize its ability to renew VASP licenses and could face additional sanctions.
