The U.S. Department of Justice (DOJ) has appointed the Forensic Risk Alliance (FRA) as an external watchdog for cryptocurrency exchange Binance, Bloomberg reported, citing sources familiar with the matter.
FRA, a London-based provider of forensic accounting and compliance consulting services, beat Sullivan & Cromwell to take the job, Bloomberg added. Binance must be monitored for three years as part of a plea deal with the DOJ regarding money laundering violations.
Monitoring involves third parties ensuring legal compliance of nominated persons in an effort to enhance transparency and compliance. Analysts have previously stated that Binance’s surveillance would be “difficult” for the company and take up a lot of its internal resources, but it could also allow Binance to re-enter markets it had previously left off, The Block previously reported.
Headquartered in New York City, Sullivan & Cromwell serves clients in banking regulation, digital assets, economic sanctions, and financial crime. In February 2024, the company was hit with a class action lawsuit from FTX creditors who claimed the company was too close to the exchange before its collapse.
Binance’s Plea Deal
In November 2023, the DOJ ended its investigation into Binance and fined Binance $4 billion in a plea deal that allowed the exchange to continue operating.
Changpeng ‘CZ’ Zhao was forced to step down as CEO and pay $50 million. He also pleaded guilty to violating the Bank Secrecy Act and operating an unlicensed money transfer business and was sentenced to four months in prison.
On May 9, Canada’s financial regulator, the Financial Transactions and Reports Analysis Center of Canada (FINTRAC), fined Binance approximately CAD 6 million ($4.4 million) for two counts of violating money laundering regulations.
The Block requested comment from FRA and Sullivan & Cromwell.
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