The US Department of Justice (DOJ) has appointed the international consulting firm Forensic Risk Alliance (FRA) to ensure that the cryptocurrency exchange Binance complies with regulatory requirements over the next three years, according to sources familiar with the matter.
Appointing a third-party company to oversee the exchange’s compliance for the next three years was a key requirement of Binance’s plea agreement reached in November 2023, which acknowledged money laundering and other federal charges and imposed a $4.3 billion fine.
According to Bloomberg on May 10th, FRA will have access to internal records, offices, and employees to provide the DOJ with the latest information about the company’s activities.
Sullivan & Cromwell law firm was initially the most qualified to receive the appointment, but the company had previously worked for its competitor cryptocurrency exchange FTX before it went bankrupt, leading the DOJ to appoint FRA instead.
On February 17th, reports surfaced that FTX creditors alleged Sullivan & Cromwell’s involvement in “FTX Group’s multi-billion-dollar fraud.”
As part of a class-action lawsuit, creditors stated in court documents, “S&C was aware of the negligence, falsehoods, and fraud by FTX US and FTX Trading Ltd., as well as the misappropriation of funds from collective members.”
However, it is reported that Sullivan & Cromwell is expected to be selected for a separate five-year monitoring role for Binance, representing the Financial Crimes Enforcement Network of the Treasury Department.
The appointment comes weeks after former Binance CEO Changpeng Zhao was sentenced to prison.
On April 30th, Zhao was sentenced to four months in prison for failing to implement effective anti-money laundering programs at cryptocurrency exchanges.
Although prosecutors initially sought three years in prison, Judge Jones decided to shorten the sentence, stating that there was no evidence that Zhao was directly aware of specific illegal activities at Binance.
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