South Korean cryptocurrency exchange Bithumb has received a preliminary notice of sanctions that could lead to a six-month partial business suspension, local media reports.

The notice came from the Financial Services Commission’s Financial Intelligence Unit (FIU), which oversees anti-money laundering compliance for crypto firms under the Act on Reporting and Using Specified Financial Transaction Information.

Regulators said Bithumb continued transactions with overseas virtual asset businesses that were not registered in South Korea and failed to properly enforce certain Know Your Customer procedures. The FIU proposed a six-month partial suspension and disciplinary action against the exchange’s chief executive.

The restriction would apply only to virtual asset transfers by newly registered users. Existing customers would still be able to deposit and withdraw Korean won and cryptocurrencies and trade on the platform, according to the report.

The decision isn’t final and may change during a review process. The FIU plans to hold a sanctions deliberation committee later this month to determine the final penalty.

The case comes as South Korean regulators tighten oversight of digital asset platforms. LAst year, the FIU imposed a three-month partial suspension and a 35.2 billion won ($23.65 million) fine on Dunamu, the operator of Upbit, for similar compliance failures. Korbit received a similar 2.73 billion won fine and an institutional warning as well.

Founded in 2014, Bithumb is one of South Korea’s largest exchanges and ranks second in domestic trading volume behind Upbit according to CoinGecko data. Together with Coinone and Korbit, these platforms account for the vast majority of the crypto trading activity of exchanges registered in the country.

The sanctions come after last month Bithumb mistakenly distributed billions of dollars worth of bitcoin to users, prompting the country’s financial watchdog to step up oversight of cryptocurrency markets.

CoinDesk has reached out to Bithumb for comment but hasn't heard back at the time of writing.