DOJ Appoints FRA to Monitor Binance Compliance Over Three Years


The United States Department of Justice (DOJ) has reportedly selected international consulting firm Forensic Risk Alliance (FRA) to oversee that cryptocurrency exchange Binance complies with regulatory requirements for the next three years. 

This appointment is a significant step in ensuring that Binance adheres to the terms of its plea deal made in November 2023, following charges of money laundering and other federal offenses, which included a hefty $4.3 billion fine and CZ resigning as the chief executive of the exchange.

Binance to Share Internal Records

As part of the agreement, FRA will have access to Binance’s internal records, premises, and employees, providing regular updates to the DOJ on the exchange’s activities, as reported by Bloomberg on May 10.

Initially, law firm Sullivan and Cromwell were set to monitor Binance’s compliance. However, the firm’s past involvement with rival crypto exchange FTX, which faced allegations of fraud, led the DOJ to choose FRA instead.

Sullivan & Cromwell to be Selected for a 5-Year Monitoring Role

FTX creditors accused Sullivan & Cromwell of being complicit in FTX Group’s fraudulent activities, alleging that the firm was aware of omissions and misappropriation of funds. This tarnished the firm’s reputation, influencing the DOJ’s decision to appoint FRA.

Despite this, there are expectations that Sullivan & Cromwell may be selected for a separate five-year monitoring role, representing the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

Sentencing of Binance Founder

The appointment of FRA follows the recent sentencing of Binance’s former CEO, Changpeng “CZ” Zhao. Zhao was sentenced to four months in prison on April 30 for failing to maintain an effective anti-money laundering (AML) program at Binance. 

Although prosecutors sought a three-year prison term, the judge opted for a shorter sentence, stating that there was no evidence implicating Zhao directly in any illegal activities at the exchange.

Compliance in the Sector

This move by the DOJ to appoint FRA demonstrates the government’s commitment to enforcing regulatory compliance within the crypto industry. 

By having an independent monitor like the FRA oversee Binance’s operations, the DOJ aims to ensure that the exchange operates within the bounds of the law and implements adequate measures to prevent money laundering and other illicit activities.

With regulatory scrutiny on the rise, this development underscores the importance of exchanges like Binance adhering to stringent compliance standards to maintain trust and legitimacy in the rapidly evolving crypto market.

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