The United States Department of Justice (DOJ) has reportedly chosen Forensic Risk Alliance (FRA), an international consultancy firm, to ensure that cryptocurrency exchange Binance complies with regulatory requirements for the next three years, according to sources familiar with the situation.
As part of Binance’s plea deal in November 2023, the appointment of a third-party firm to monitor the exchange’s compliance over the next three years was a crucial condition. In the plea deal, Binance admitted to money laundering and other federal charges, resulting in a $4.3 billion fine.
FRA will have access to internal records, premises, and employees to provide the DOJ with regular updates on the company’s activities, as reported by Bloomberg on May 10.
Initially, law firm Sullivan & Cromwell was expected to secure the contract. However, due to their previous work for rival crypto exchange FTX before its bankruptcy, the DOJ decided to appoint FRA instead.
On February 17, Cointelegraph reported that creditors of FTX accused Sullivan & Cromwell of actively participating in the “FTX Group’s multibillion dollar fraud” in a class-action lawsuit. The creditors stated in a court filing that Sullivan & Cromwell had knowledge of FTX US and FTX Trading Ltd.’s deceptive practices and misappropriation of funds.
However, there are rumors that Sullivan & Cromwell may still be chosen for a separate five-year monitoring role for Binance, representing the Treasury Department’s Financial Crimes Enforcement Network.
This reported appointment comes shortly after Binance’s former CEO, Changpeng “CZ” Zhao, was sentenced to four months in prison on April 30 for failing to maintain an effective Anti-Money Laundering program at the crypto exchange. Initially, the prosecutors sought a three-year prison term, but the judge opted for a shorter sentence, citing a lack of evidence that Zhao was directly aware of specific illegal activities at Binance.
In related news, Binance has recently obtained approval from the Financial Intelligence Unit for its return to India. Additionally, Binance has responded to the Wall Street Journal’s allegations, and Hong Kong’s crypto ETFs continue to gain traction, amounting to around $50 billion.