US Department of Justice Appoints FRA to Monitor Binance
The US Department of Justice (DOJ) has selected the consulting firm Forensic Risk Alliance (FRA) to oversee Binance after the crypto exchange pleaded guilty to violating US money-laundering regulations and trade sanctions.
Why FRA was Chosen Over Sullivan & Cromwell
- FRA’s appointment stems from a plea agreement that Binance entered, agreeing to a substantial penalty of $4.3 billion.
- Binance founder Changpeng Zhao pleaded guilty and resigned as CEO, receiving a four-month prison sentence.
FRA’s Responsibilities as Binance Monitor
As Binance’s monitor, FRA will have extensive responsibilities:
- Access to Binance’s internal records, facilities, and staff to ensure compliance with the plea agreement.
- Monitor and report the company’s activities directly to the US government.
Criticism of Sullivan & Cromwell
Sullivan & Cromwell, a Wall Street law firm, was initially considered for the monitorship but lost favor due to its association with the now-defunct FTX. Critics pointed fingers at the firm for not detecting fraud perpetrated by FTX co-founder Sam Bankman-Fried.
“After months of bureaucratic delays, Binance finally has a monitor, and the corrupt Sullivan & Cromwell got the shaft,” – Rho Rider
Binance’s Compliance Milestones
- Sullivan & Cromwell expected to secure a separate monitorship with the Treasury Department’s Financial Crimes Enforcement Network.
- Binance agreed to pay a fine to India’s Financial Intelligence Unit to operate in the country.
- Canada’s FINTRAC imposed a $4.4 million fine on Binance for failing to meet AML regulations.
Hot Take: Ensuring Compliance in the Crypto Sector
The appointment of FRA as Binance’s monitor by the DOJ underscores the increasing regulatory scrutiny faced by cryptocurrency exchanges globally. It serves as a reminder of the importance of compliance with AML regulations and trade sanctions to maintain transparency and trust in the digital asset space.
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