The U.S. Department of Justice (DOJ) has selected consulting firm Forensic Risk Alliance (FRA) to oversee Binance.
This development follows Binance’s guilty plea for violating US money laundering regulations and trade sanctions.
Why DOJ chose FRA over Sullivan & Cromwell
This appointment follows a plea agreement signed by Binance last November. As part of the deal, Binance agreed to pay a significant fine of $4.3 billion.
Additionally, Binance founder Changpeng Zhao pleaded guilty and resigned as CEO. As a result, the court sentenced him to four months in prison on April 30.
Read more: Binance Review 2024: Is It the Right Crypto Exchange for You?
As Binance’s monitor, FRA’s responsibilities will be extensive. They will have access to Binance’s internal records, facilities, and employees to verify compliance with the petition. They are required to monitor the company’s activities and report directly to the U.S. government.
FRA was initially preferred over the prominent Wall Street law firm Sullivan & Cromwell, which was considered a strong candidate along with several other major contenders. It lost popularity due to its association with the now-defunct FTX.
In particular, critics who suffered financial losses from the FTX collapse faulted Sullivan & Cromwell for failing to detect fraud perpetrated by FTX co-founder Sam Bankman-Fried. Community members therefore expressed satisfaction with the decision to recuse Sullivan & Cromwell’s appointment.
“After months of bureaucratic delays, Binance finally got its hands on the watchdog, putting the corrupt Sullivans and Cromwells in power.” Cryptocurrency community member Rho Rider wrote From X (Twitter).
Despite the Justice Department’s setback, Sullivan & Cromwell is expected to secure a separate five-year Binance oversight mandate for the Treasury Department’s financial crimes enforcement network. This role will focus on ensuring Binance complies with requirements to report suspicious activity, a move that stems from previous complaints from the Treasury Department.
In other developments, Binance agreed to pay a fine to the Financial Intelligence Unit of India (FIU-IND) to continue doing business in India. This marks an important compliance milestone in a region where authorities enforce strict anti-money laundering (AML) laws.
Read more: Cryptocurrency regulation: what are the pros and cons?
Additionally, the Financial Transactions and Reports Analysis Center of Canada (FINTRAC) fined Binance $4.4 million. FINTRAC claims Binance failed to meet Canadian AML regulations, highlighting ongoing regulatory issues in the cryptocurrency sector.
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