On March 31, South Korea’s second-largest cryptocurrency exchange, Bithumb, will request shareholders to reappoint CEO Lee Jae-won for a new two-year term. This is the $44 billion phantom Bitcoin ($BTC) failures, a record $24 million fine, and three active regulatory investigations.
The decision to retain leadership rather than proceed with a management reorganization while regulators are still determining whether further sanctions are warranted shows Bithumb is prioritizing business continuity over accountability.
$44 billion glitch exposed
On February 6th, Bithumb staff running promotional events entered the payment unit. $BTC Not Korean won. The system granted a total of 620,000 credits to 695 user accounts. $BTCapproximately 15 times the exchange’s actual holdings of approximately 42,000 $BTC.
The trading engine treated the fictitious balance as real. Some users sold or withdrew approximately $1,788 within 35 minutes. $BTC It was worth between $125 million and $135 million, causing Bithumb’s local Bitcoin price to plummet by 17%. World markets were unaffected.
Bithumb recovered 99.7% of erroneous credits on the same day. The exchange covered the remaining shortfall from company funds and compensated affected users for 110% of their losses. Customers did not permanently lose money and their on-chain reserves remained intact.
But CEO Lee acknowledged at a Feb. 11 Congressional hearing that the exchange only reconciles its internal ledger with its actual holdings once every 24 hours, and that there have been small errors before.
Three spacecraft still hanging over Bitsum
The Financial Intelligence Unit (FIU) has already imposed the largest fine in South Korean history against a virtual asset exchange.
The 36.8 billion won ($24 million) fine stems from 6.59 million anti-money laundering violations discovered during inspections in 2025, Yonhap News reported. Mr. Bitham also received:
- Partial suspension of operations for 6 months,
- The CEO’s reprimand,
- The compliance officer was suspended for six months.
Two additional investigations remain unresolved. The Financial Supervisory Service (FSS) is investigating possible violations of the Virtual Asset User Protection Act related to the February 6 glitch.
A separate FIU investigation is looking into Bithumb’s order book sharing with Stellar Exchange, an unregistered platform in Australia.
South Korean virtual currency exchanges are not legally classified as financial institutions. This means that a CEO’s disciplinary action does not legally prevent the executive from continuing in his or her job.
Still, the precedent set by rival Upbit suggests otherwise. After Upbit’s parent company Dunam received a similar FIU sanction in February 2025, then-CEO Lee Silgoo resigned within three months and moved into an advisory role, according to the Korea Times.
What will be decided in the March 31st vote?
In addition to reappointing the CEO, shareholders will vote on the following matters:
- Bithumb’s corporate bond issuance limit will be raised to 300 billion won ($225 million).
- Appointed new auditors to strengthen internal controls.
- Rename affiliate Bithumb A to “Bithumb Asset”.
The increase in bond limits is widely seen as preparation for future IPOs and possible market consolidation.
The investigation will continue regardless of whether Lee survives the vote. However, given that confidence in the exchange’s internal systems has not yet been restored, the March 31 results will reveal whether Bithumb shareholders see continuity as a strength or a weakness.
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