The U.S. Department of Justice (DOJ) has selected the Forensic Risk Alliance (FRA) to oversee Coin's compliance with anti-money laundering regulations and trade sanctions, Bloomberg reports. The decision is part of the cryptocurrency exchange's plea deal following allegations that it violated financial regulations.The U.S. Department of Justice chose the FRA for the position over the prominent Wall Street law firm Sullivan & Cromwell and other prominent law firms.

Binance enters a three-year regulatory period

Under the plea agreement, CoinShares is obligated to undergo three years of oversight.This entails granting the FRA access to internal records, facilities and personnel to ensure compliance with regulatory standards. Given the FRA's expertise in corruption and fraud investigations, the company is considered capable of effectively fulfilling its surveillance duties.

This development highlights the intense scrutiny faced by major players in the cryptocurrency space and underscores the critical role of independent regulators in maintaining cryptocurrency space Compliance. Sullivan & Cromwell was initially considered the frontrunner for the position, but reportedly faced a setback due to its involvement with FTX, a former competitor of CoinShares.

The firm's involvement with FTX, particularly during its pre-bankruptcy and subsequent recovery efforts, raised concerns about its ability to provide impartial oversight. Allegations that it failed to detect fraudulent activity during FTX's collapse further damaged Sullivan & Cromwell's reputation, prompting the DOJ to choose an alternative monitor.

Cryptocurrency Regulation Strengthens

Coin's regulatory agreement and large penalties highlight the growing regulatory scrutiny surrounding cryptocurrency exchanges. The FRA's involvement signals a commitment to strict regulation and highlights the changing regulatory landscape of the cryptocurrency industry.

In June 2023, the U.S. Securities and Exchange Commission (SEC) sued CoinSecurity and its former CEO, Changpeng Zhao, alleging violations of securities laws. The SEC's action coincided with CoinSec's $4.3 billion funding round sinking communications with the Department of Justice over the legal matter. CoinAn opposed the move, claiming procedural errors and questioning the relevance of the DOJ's resolution to the SEC's original claims.

In addition, a U.S. federal judge barred Zhao from traveling to his place of residence in the UAE due to concerns about extradition and the risk of absconding.Despite agreeing to post a substantial $175 million bail, Zhao's vast wealth and ties to the UAE have raised concerns about his commitment to return to his home country for sentencing. Zhao was recently sentenced to four months in prison.