Bithumb CEO Lee Jae-won is pushing for a second two-year term at the helm of South Korea’s second-largest cryptocurrency exchange, even as the company faces a $24.2 million regulatory fine, fallout from a system error that distributed 620,000 phantom Bitcoin to users, and an active government probe into alleged order book sharing with an unregistered foreign platform.
The shareholders’ meeting is scheduled for March 31, 2026. If approved, Lee would serve another two years as CEO of an exchange currently navigating three simultaneous regulatory crises.
Three Regulatory Crises Converging on One Exchange
South Korea’s Financial Intelligence Unit (FIU) imposed a 36.8 billion won (~$24.2 million) fine on Bithumb and ordered a six-month partial business suspension running from March 27 to September 26, 2026. The penalty covers approximately 6.65 million AML and KYC compliance breaches. External crypto transfers for new customers will be frozen for the entire suspension period.
CEO Lee personally received a reprimand warning from regulators. The exchange’s reporting officer received a six-month suspension.
Separately, a system error in February 2026 credited users with 2,000 BTC each instead of the intended 2,000 Korean won (~$1.40). The glitch distributed a phantom total of 620,000 BTC, roughly 15 times Bithumb’s actual Bitcoin holdings.
South Korea’s Financial Supervisory Service (FSS) is still investigating the Bitcoin payout incident for potential violations of the Virtual Asset User Protection Act. The scale of the error, given that Bitcoin long positions worth billions regularly move markets, underscores the systemic risk a glitch of this magnitude poses.
A third regulatory front involves an FSS probe into Bithumb’s alleged order book sharing with Stellar Exchange, an Australia-based platform classified as an unregistered foreign operator. This investigation could carry the most severe consequences, as it directly threatens Bithumb’s ability to renew its virtual asset service provider (VASP) license.
Most coverage has treated these incidents as separate stories. In practice, all three are converging on a single leadership decision at the March 31 vote.
Why the Board Can Still Propose Lee for Another Term
The legal reason Lee’s candidacy is even possible comes down to a structural gap in South Korean regulation: crypto exchanges are not classified as financial institutions. Unlike traditional banks, where FIU sanctions can legally compel executive resignations, crypto exchange leadership is not subject to the same forced accountability mechanisms.
Bithumb’s board has framed the reappointment as a stability measure. According to anonymous industry sources cited by Korea Times, “Bithumb chose to retain current leadership to maintain operational continuity and organizational stability while addressing ongoing challenges, rather than pursue management restructuring.”
The market is watching the Upbit precedent closely. Upbit CEO Lee Sirgoo received similar FIU sanctions in February 2025 and stepped down voluntarily three months later in May 2025. That timeline suggests that even without legal compulsion, regulatory and stakeholder pressure can force a CEO out, just on a delayed basis.
Bithumb ranks as South Korea’s second-largest crypto exchange by trading volume, behind Upbit. South Korea has over 16 million crypto exchange users, representing more than 30% of the country’s population, a user base that gives both the exchange and its regulators significant leverage.
VASP License Renewal and the March 31 Vote
The shareholders’ meeting on March 31 will determine whether Lee receives a second two-year term. The operational suspension begins four days earlier on March 27, meaning shareholders will vote while the exchange is already operating under restricted conditions.
The more consequential pressure may come not from the vote itself but from the pending VASP license renewal. An anonymous industry official told CoinTelegraph: “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.”
That license dependency gives regulators implicit leverage over the reappointment outcome even without the legal authority to block it directly. The order book sharing probe, in particular, could jeopardize the renewal if it confirms Bithumb facilitated trading through an unregistered foreign operator.
South Korea’s crypto market is projected to generate $1.3 billion in revenue for 2026. Given the growing regulatory attention to crypto platforms globally, how Bithumb navigates this convergence of crises could set a precedent for exchange governance standards across the region.
The shareholder vote outcome is not yet known. The meeting has not occurred as of publication.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
