Bithumb CEO Faces Reappointment Vote Amid $44B Glitch and Record Fine

South Korea's second-largest cryptocurrency exchange, Bithumb, is set to hold a shareholder meeting on March 31 to vote on reappointing CEO Lee Jae-won for another two-year term. The decision comes despite a series of high-profile controversies, including a staggering $44 billion phantom Bitcoin error, a record-breaking $24 million regulatory fine, and three ongoing investigations.

The incident that triggered this scrutiny occurred on February 6, when a Bithumb employee mistakenly entered Bitcoin payout units instead of Korean won during a promotional event. This error temporarily credited 695 user accounts with approximately 620,000 BTC — nearly 15 times the exchange's actual holdings. Within 35 minutes, users transacted around 1,788 BTC valued between $125 and $135 million, causing Bithumb's local Bitcoin price to drop 17%. Global markets remained unaffected. Bithumb swiftly recovered 99.7% of the erroneous credits and compensated affected users at 110% of their losses, ensuring no permanent customer losses.

However, the incident exposed a critical internal control flaw. CEO Lee admitted before South Korea's parliament that Bithumb only reconciled its internal ledgers with actual holdings once every 24 hours, and that similar smaller errors had happened before.

South Korea's Financial Intelligence Unit (FIU) responded with the largest-ever penalty issued to a virtual asset exchange — a 36.8 billion won fine alongside a six-month partial business suspension and sanctions against key executives. Two additional probes remain active, covering potential violations of the Virtual Asset User Protection Act and a suspected partnership with an unregistered Australian trading platform.

The March 31 shareholder vote will also address raising Bithumb's bond issuance ceiling to 300 billion won, a move widely interpreted as groundwork for a future IPO. Whether shareholders prioritize stability or demand accountability will signal how seriously South Korea's crypto industry takes governance reform amid tightening regulatory oversight.