South Korea's Financial Supervisory Service (FSS) is set to impose sanctions on cryptocurrency exchange Bithumb following an inspection that uncovered significant internal control deficiencies. Governor Lee Chan-jin announced the regulatory action, which stems from a problematic Bitcoin payment incident, highlighting the evolving oversight framework for digital assets in South Korea. The FSS's investigation revealed weaknesses in Bithumb's operational controls, prompting a comprehensive legal review to determine appropriate sanctions. The regulator is also assessing potential violations of the Act on Virtual Asset User Protection, which mandates stringent security measures and operational transparency for exchanges. This move signals a broader regulatory strategy aimed at enhancing the integrity of South Korea's digital asset market.