Bithumb is moving ahead with a plan to keep CEO Lee Jae-won in office even as the South Korean exchange faces pressure from regulators and fresh questions over its internal controls.
Meanwhile, the decision comes after penalties tied to anti-money laundering failures and while authorities continue to review a bitcoin overpayment case and another matter linked to order book sharing with an overseas platform. Shareholders are set to vote on Lee’s renewal at a meeting on March 31. If approved, he will remain in the top role for another two years.
Bithumb moves to renew CEO term amid regulatory pressure
Bithumb plans to put Lee Jae-won’s reappointment before shareholders at its regular meeting on March 31. His current term ends this month, and the proposal would extend his leadership for two more years. The move has drawn attention because it comes at a time when the exchange is dealing with multiple regulatory issues.
Industry officials said the company appears to favor continuity over leadership change. That approach suggests Bithumb wants to keep its current management team in place while it addresses ongoing reviews and prepares for further scrutiny. The company has not shown signs of a broad executive reshuffle despite pressure from recent enforcement action.
The timing has become a key part of the story. South Korea’s Financial Intelligence Unit, or FIU, recently imposed strong penalties on the exchange over anti-money laundering failures. As we reported, those measures included a six-month partial suspension of some operations and a fine of 36.8 billion won, or about $24 million.
The sanctions also included a reprimand warning for Lee and a six-month suspension for the reporting officer. Even so, crypto exchanges in South Korea are not legally treated the same way as traditional financial institutions. Because of that, a reprimand warning does not automatically block an executive from staying in office.
That legal difference has allowed Bithumb to move ahead with the vote. Still, the case has raised questions about whether leadership stability should take priority over management accountability. The result of the March 31 meeting will show whether shareholders support the company’s current direction during a difficult period.
Sanctions and pending probes keep pressure on the exchange
The FIU’s action against Bithumb followed an anti-money laundering inspection carried out between March 17 and April 18 last year. Regulators found violations serious enough to justify a partial suspension and a large fine. Under the sanction, the exchange will face limits on some services for new customers for six months.
The latest enforcement step did not close all of Bithumb’s regulatory matters. Authorities are still reviewing the company’s order book sharing arrangement with Australia-based Stellar Exchange. Regulators flagged the platform last year after classifying it as an unregistered foreign operator. Since that issue was not part of the latest sanctions package, Bithumb may still face further action.
That separate review remains important because the exchange must renew its virtual asset service provider license. Any new penalty could place more attention on the company’s compliance record at a time when licensing remains a core issue for every major trading platform in the country.
An industry official told local media,
“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 remark captures the position the company now faces as it tries to keep business operations steady while key decisions remain pending.
The sequence of events has kept Bithumb under constant watch. The exchange must now deal with current sanctions, respond to ongoing probes, and prepare for a shareholder vote on its top executive. Each part of that process adds to the pressure surrounding the company’s near-term plans.
Bitcoin overpayment glitch deepens scrutiny of internal controls
Another major issue came from a bitcoin overpayment incident on Feb. 6. During a promotional event, users were reportedly credited with bitcoin amounts far above what the exchange intended to distribute. Reports said customers received 2,000 bitcoin per user instead of 2,000 won in rewards, creating a mismatch that exposed serious control failures.
The glitch led to the distribution of a volume of bitcoin that Bithumb could not back with actual holdings. Reports said the error resulted in users being credited with amounts that were about 15 times greater than the exchange’s real bitcoin holdings. That case drew immediate regulatory attention because it pointed to weaknesses in both internal verification and asset management systems.
South Korea’s Financial Supervisory Service, or FSS, has been reviewing the matter and is nearing the end of its inspection, according to local reports. The case is being examined from more than one legal angle. The FSS is looking at possible breaches of the Virtual Asset User Protection Act, while the FIU is reviewing whether the exchange violated the law on the reporting and use of specified financial transaction information.
The outcome of that review has not yet been disclosed. Even so, the pending result adds another layer of uncertainty around Lee’s reappointment. If regulators decide to impose more penalties, the debate over management responsibility is likely to grow stronger.
The glitch also damaged confidence in the exchange’s operating systems. For a major trading platform, accurate asset handling and transaction controls sit at the center of daily business. A payout error of that size can quickly move beyond a technical problem and become a broader governance issue. That is why the case remains central to the discussion over whether Bithumb should keep its current leadership team.
Leadership test unfolds as South Korea’s crypto market expands
Bithumb remains the second-largest cryptocurrency exchange in South Korea by trading volume, behind Upbit and ahead of Korbit, according to CoinGecko data. That standing makes the company’s regulatory troubles more visible because developments at one large exchange can draw attention across the wider local market.
The case has also invited comparison with Upbit operator Dunamu. In February last year, the FIU issued Dunamu a three-month partial suspension and a reprimand warning for its CEO over know-your-customer and anti-money laundering violations. Then-CEO Lee Sirgoo stepped down about three months later and moved into an advisory role.
That example has shaped expectations around Bithumb. Some market watchers had expected the FIU sanctions to become a barrier to Lee Jae-won’s continuation. Instead, Bithumb appears set to ask shareholders to back the same leadership team while the company works through its legal and compliance challenges.
The broader South Korean crypto market has been growing. Reports say the sector has gained support from a friendlier environment since the election of President Lee Jae-myung in June last year. The country has also seen strong retail participation, with crypto exchange users surpassing 16 million three months earlier, equal to more than 30% of the population.
That growth makes regulatory discipline even more important for large exchanges. As more users enter the market, platform reliability and compliance standards face closer review from both regulators and customers. Bithumb’s current situation shows how quickly operational failures and compliance breaches can turn into a wider leadership issue.