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The U.S. Department of Justice has tasked the Forensic Risk Alliance (FRA) with monitoring Binance, the world's largest cryptocurrency exchange, for the next three years. This move follows Binance’s November plea bargain involving hefty fines for several compliance failures.
FRA to Oversee Binance Compliance, Ensuring Adherence to DOJ Standards for Three Years
According to people familiar with the case (via Cointelegraph), the US Department of Justice (DOJ) has hired international consultancy firm Forensic Risk Alliance (FRA) to ensure that cryptocurrency exchange Binance meets regulatory standards for the next three years.
Appointing a third-party business to oversee the exchange's compliance for the next three years was a crucial stipulation of Binance's November 2023 plea bargain, in which it pled guilty to money laundering and other criminal offenses and was fined $4.3 billion.
As per a Bloomberg article dated May 10, the FRA will be granted comprehensive access to internal records, facilities, and workers, enabling them to provide regular and detailed updates to the DOJ on the company's operations.
Despite the law firm Sullivan & Cromwell being initially considered, the DOJ opted for FRA due to the latter's extensive experience and successful track record, particularly in their work with competitor crypto exchange FTX before its bankruptcy.
On February 17, Cointelegraph stated that FTX creditors accused Sullivan & Cromwell of actively participating in the "FTX Group's multibillion-dollar fraud."
Sullivan & Cromwell Tapped for Binance Monitoring Amid Scrutiny Over Past FTX Involvements
The creditors wrote in a court filing as part of the class-action case that "S&C knew about FTX US and FTX Trading Ltd.'s omissions, untruthful and fraudulent conduct, and misappropriation of Class Members' funds."
However, Sullivan & Cromwell are expected to be appointed to a separate five-year monitoring role for Binance, representing the Treasury Department's Financial Crimes Enforcement Network.
The alleged appointment comes only weeks after Binance's former CEO, Changpeng "CZ" Zhao, was sentenced to prison.
On April 30, Zhao was imprisoned for four months for failing to establish an adequate anti-money laundering program at the cryptocurrency exchange.
Although prosecutors wanted a three-year prison sentence, Judge Jones opted for a shorter sentence, citing a lack of proof that Zhao had explicitly been told of unlawful conduct at Binance.
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