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 Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term. 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 Settlement Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Read this Term 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.