Bithumb pushes for CEO reappointment despite bitcoin glitch fallout
Bithumb CEO Lee Jae-won speaks during a National Assembly hearing in Seoul, Feb. 11. Yonhap
Bithumb is pressing ahead with plans to renew CEO Lee Jae-won’s term despite a string of controversies, including an erroneous bitcoin distribution incident last month, industry officials said Sunday.
The country’s second-largest cryptocurrency exchange was already hit with heavy sanctions by the Financial Intelligence Unit (FIU) under the Financial Services Commission, including a six-month partial suspension of operations and a 36.8 billion won ($24 million) fine for breaches of anti-money laundering rules. The measures also included a reprimand warning for the CEO and a six-month suspension for the reporting officer.
In addition to these penalties, Bithumb is still awaiting the outcome of an inspection into its order book sharing with an overseas platform. Meanwhile, a separate probe by the Financial Supervisory Service (FSS) into the erroneous bitcoin payout case is nearing completion, raising the prospect of further sanctions and intensifying scrutiny over management.
According to industry sources, Bithumb will convene its regular shareholders’ meeting on March 31, where a proposal to extend Lee’s term will be put to a vote. With his current term ending this month, approval would grant him a new two-year term.
The vote comes despite expectations that the FIU’s sanctions would pose a significant hurdle to the leadership’s continuation.
Crypto exchanges are not legally classified as financial institutions, meaning executives can remain in office even after receiving a reprimand. However, such disciplinary action is still considered severe and had been viewed as a potential obstacle to reappointment.
Nevertheless, Bithumb appears to have opted to retain its current leadership rather than pursue a reshuffle, a move seen as an effort to maintain operational continuity and organizational stability while addressing ongoing challenges.
Even if he secures another term, Lee will still need to contend with a range of unresolved regulatory risks. The FIU’s sanctions were limited to the findings of an anti-money laundering on-site inspection conducted between March 17 and April 18 last year.
A separate issue still under review is Bithumb’s order book sharing with Australia-based Stellar Exchange. In the latter half of last year, regulators flagged the arrangement, as the platform had been classified as an unregistered foreign operator. As this matter was not included in the latest sanctions, additional disciplinary action remains possible.
The findings from the probe into the firm’s bitcoin overpayment incident on Feb. 6 have also yet to be disclosed. The glitch, which resulted in users being credited with amounts some 15 times greater than the exchange’s actual holdings, exposed critical weaknesses in both internal verification systems and asset management controls.
Regulators are reviewing the case from multiple angles, with the FSS examining potential violations of the Virtual Asset User Protection Act, while the FIU is looking into possible breaches of the law governing the reporting and use of specified financial transaction information.
If further penalties are imposed, scrutiny over management accountability is expected to intensify.
A comparable case was seen at Dunamu, the operator of the country’s largest cryptocurrency exchange, Upbit.
The company received a three-month partial suspension and a reprimand warning for its CEO from the FIU in February last year over violations of know-your-customer and anti-money laundering requirements. Then-CEO Lee Sirgoo stepped down about three months later, in May, and moved into an advisory role.
“Bithumb will be on edge awaiting the results of ongoing regulatory probes, as the company still needs to renew its virtual asset service provider license,” an industry official said.