Share this article
The U.S. Department of Justice (DOJ) selected Forensic Risk Alliance (FRA) for Binance Holdings’ three-year monitoring over its initial preferences, Sullivan & Cromwell (S&C) and BNB Bloomberg. reported today.
This is a requirement of Binance’s November plea deal for violating money laundering rules and trade sanctions. Binance also agreed to a $4.3 billion fine and CEO Changpeng Zhao resigned and was sentenced to four months in prison.
The FRA’s role includes scrutinizing Binance’s internal operations to ensure compliance and reporting findings to the government. The firm has a history of performing similar work, including consulting for Gunvor SA during its $660 million settlement with the DOJ.
Choosing FRA over Sullivan & Cromwell, a prominent Wall Street law firm, represents a change from what was expected. The company was initially considered for the role but was ultimately rejected. This is likely due to past work on FTX, Binance’s rival cryptocurrency exchange, which went bankrupt in November 2022.
Sullivan & Cromwell was criticized by FTX investors for its involvement in the company. A group of FTX investors, who filed a lawsuit against the company in February, alleged that the company knowingly provided services or support that directly enabled or facilitated FTX’s fraudulent activities.
This week, FTX announced a new plan to pay 98% of creditors at least 118% of recognized claims. The restructuring plan, which must be approved by the bankruptcy court, has faced pushback from Sunil Kavuri, who represents the largest group of FTX creditors. He argued that repayments should reflect the current market price of the assets, not their value at the time of FTX’s bankruptcy.
Kavuri also noted the exchange’s previous relationship with S&C. He opposes including an immunity provision that would protect S&C from lawsuits related to misconduct.
The DOJ’s selection of FRA to monitor Binance was welcomed by those affected by the FTX collapse, with Kavuri saying “truth wins.”
we asked @TheJusticeDept Judge Kaplan held the co-conspirators accountable in sentencing SBF.
Sullivan and Cromwell have taken the lead in monitoring Binance.
The DOJ has now selected Forensic Risk Alliance to monitor Binance.
To all affected victims, thank you to all FTX customers… pic.twitter.com/DuDjaAr8F3
— Sunil (FTX Creditor Champion) (@sunil_trades) May 10, 2024
However, the report noted that S&C could still be appointed as a watchdog for Binance by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
Share this article