According to the latest report, the United States Department of Justice (DOJ) has granted the three-year monitorship of Binance to consulting firm Forensic Risk Alliance (FRA). This appointment is part of the exchange’s plea deal with the Justice Department last year.
In November 2023, Binance entered into a plea deal with the DOJ related to money laundering violations, agreeing to pay $4.3 billion in fines and appoint an independent compliance monitor. The company’s co-founder Changpeng “CZ” Zhao also agreed to step down as CEO as part of the deal and was recently sentenced to four months in jail.
Here’s Why DOJ Chose FRA Over Sullivan & Cromwell
Citing anonymous sources, Bloomberg recently reported that Forensic Risk Alliance was given the nod ahead of Wall Street law firm Sullivan & Cromwell to act as an independent monitor for Binance Holdings Ltd. A monitor is tasked with evaluating a company’s practices to eliminate misconduct and establish an effective ethics and compliance program.
Hence, if there is any truth in the latest revelations, London-based FRA will likely be able to access Binance’s internal records and documents, while ensuring that the exchange complies with the plea agreement over three years.
According to the report, New York-based Sullivan & Cromwell (S&C) was one of the front-runners for the monitor role. However, it appears that the controversy swirling around the law firm over its work for the now-defunct FTX exchange might have influenced the DOJ’s decision to go for FRA instead.
As Bitcoinist reported in February, FTX creditors launched a class action lawsuit against Sullivan & Cromwell, accusing the law firm of being complicit in the exchange’s collapse. FTX’s new management has always defended S&C while touting its recovery efforts for the company.
On Wednesday, May 8, FTX announced that its customers would be fully reimbursed for their losses due to the collapse.
Binance To Pay $4 Million In Canada Due To Compliance Issues
Besides the United States, Binance has been facing significant pressure from regulatory bodies in other countries. Most recently, the world’s largest cryptocurrency exchange was fined $4.4 million (C$6 million) by Canada’s financial regulator, FINTRAC.
FINTRAC charged Binance for failure to comply with money-laundering protections. As reported by Bitcoinist, the company failed to register with the Canadian financial regulator and report large virtual currency transactions.
While Binance’s regulatory woes continue to mount, the exchange has maintained that it is committed to increasing compliance. The recent establishment of the company’s first-ever board of directors appears like a move in this direction.
The total cryptocurrency market cap at $2.194 trillion | Source: TOTAL chart on TradingView