US DOJ Appoints Forensic Risk Alliance to Monitor Binance

full version at beincrypto

The US Department of Justice (DOJ) has selected the consulting firm Forensic Risk Alliance (FRA) to oversee Binance.

This development follows Binance’s guilty plea to violating US money-laundering regulations and trade sanctions.

Why DOJ Chose FRA Over Sullivan & Cromwell

This appointment stems from a plea agreement that Binance entered last November. As part of the deal, Binance agreed to pay a substantial penalty of $4.3 billion.

Furthermore, Binance founder Changpeng Zhao pleaded guilty and resigned as CEO. Consequently, the Court sentenced him to four months in prison on April 30.

As Binance’s monitor, FRA’s responsibilities will be extensive. They will gain access to Binance’s internal records, facilities, and staff to ensure compliance with the plea agreement. They must monitor and report the company’s activities directly to the US government.

FRA was favored over the well-known Wall Street law firm Sullivan & Cromwell, which was initially considered the likely candidate, along with several other top contenders. It lost favor due to its association with the now-defunct FTX.

Critics, particularly those who suffered financial losses in FTX’s collapse, have pointed fingers at Sullivan & Cromwell for not detecting fraud perpetrated by FTX co-founder Sam Bankman-Fried. Hence, the community members expressed satisfaction over the decision to avoid the appointment of Sullivan & Cromwell.

“After months of bureaucratic delays, Binance finally has a monitor, and the corrupt Sullivan & Cromwell got the shaft,” crypto community member Rho Rider wrote on X (Twitter).

Despite the setback with the Justice Department, Sullivan & Cromwell is expected to secure a separate five-year Binance monitorship for the Treasury Department’s Financial Crimes Enforcement Network. This role will focus on ensuring Binance complies with requirements to report suspicious activity, a measure stemming from prior accusations by the Treasury.

In other developments, Binance has also agreed to pay a fine to India’s Financial Intelligence Unit (FIU-IND) to continue its operations in the country. This marks a critical compliance milestone in a region where authorities enforce stringent anti-money laundering (AML) laws.

Moreover, Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC) imposed a $4.4 million fine on Binance. FINTRAC claims that Binance failed to meet Canadian AML regulations, highlighting ongoing regulatory challenges in the crypto sector.