US Department of Justice (DOJ) has selected Forensic Risk Alliance (FRA) to oversee Binance compliance with money-laundering regulations and trade sanctions, Bloomberg reported. This decision is part of the crypto exchange's plea deal following allegations of violating financial regulations. DOJ selected FRA over renowned Wall Street law firm Sullivan & Cromwell and other prominent contenders for the role.
Binance Enters Three-Year Monitorship
As per the plea agreement, Binance is obligated to submit to a three-year monitorship. This entails granting FRA access to internal records, facilities, and personnel to ensure adherence to regulatory standards. Given FRA's expertise in corruption and fraud investigations, the firm is deemed equipped to effectively fulfill its monitoring duties.
This development underscores the heightened scrutiny faced by major players in the cryptocurrency sector and highlights the pivotal role of independent monitors in maintaining compliance . Initially considered a frontrunner for this role, Sullivan & Cromwell reportedly faced setbacks due to its association with FTX, a former competitor of Binance.
The firm's involvement with FTX, particularly preceding its bankruptcy and subsequent recovery efforts, raised concerns regarding its ability to provide impartial oversight. Allegations of failure to detect fraudulent activities during FTX's downfall further tarnished Sullivan & Cromwell's reputation, prompting the DOJ to opt for an alternative monitor.
Crypto Oversight Intensifies
Binance's agreement to monitorship and substantial penalties underscore the increasing regulatory scrutiny surrounding cryptocurrency exchanges. The involvement of FRA signals a commitment to rigorous oversight and underscores the evolving regulatory landscape in the crypto industry.
In June 2023, the Securities and Exchange Commission (SEC) sued Binance and its Former CEO, Changpeng Zhao, alleging infringement of securities law. The SEC's action coincided with Binance's $4.3 billion settlement with the DOJ concerning the legal saga. Binance opposed this move, citing procedural errors and disputing the relevance of the DOJ's resolutions to the SEC's initial claims.
Besides that, a US federal judge barred Zhao from traveling to his residency in the UAE due to concerns about extradition and flight risks. Despite agreeing to a substantial $175 million bond, Zhao's considerable wealth and ties to the UAE raised apprehensions about his commitment to returning for sentencing. Zhao was recently sentenced to four months in prison.
